These are part of Sebi's efforts to incentivise and channelise household savings into long-term investment products.
The Securities and Exchange Board of India (Sebi) had already approved these measures and has now written to the Finance Ministry about the proposals. The regulator would push for implementation of these measures with the new government, official sources said.
One of the proposals include creation of a long-term investment product, Mutual Fund Linked Retirement Plan, with an additional tax incentive of Rs 50,000.
Alternatively, Sebi wants the government to enhance the tax exemption limit under Section 80C of the Income Tax Act from Rs 1 lakh to Rs 2 lakh to help make various mutual fund schemes eligible for such tax benefits.
The regulator also wants the Rajiv Gandhi Equity Savings Scheme to be brought under the enhanced limit.
At present, Section 80C provides tax exemptions on investments totalling Rs 1 lakh in various products, including certain mutual funds, insurance plans and provident fund.
However, there is no restriction on pension products launched by mutual funds but lack of tax benefits makes them unattractive.
At present, the mutual fund industry has got two retirement plans which have got tax exemptions, floated by UTI and Fidelity.
There are about 45 fund houses present in the country with total assets worth over Rs 9 lakh crore, but fund mobilisation has been tough in the past couple of years.
Under the new long-term mutual fund policy finalised by Sebi, the regulator has also asked the government to pave way for a part of Employees Provident Fund Organisation (EPFO) corpus being invested in mutual fund schemes, while the state-run companies would be encouraged to park their surplus funds with various MFs.
Sebi has asked the government that EPFO be allowed to invest up to 15 per cent of their corpus in equities and mutual funds.
Further, the members of EPFO who are earning more than Rs 6,500 per month be offered an option for a part of their corpus be invested in a MF product of their choice.
Besides, Sebi wants all Central Public Sector Enterprises (CPSEs) be permitted to invest their surplus funds in mutual fund schemes. Currently, only navratana and miniratna CPSEs are allowed to invest in such schemes.