Budget Impact: What Mutual Fund investors will have to pay

retail debt market investors

Securities transaction tax reduced for ETF/MF:

STT has been reduced to R1 from R250 per lakh on redemption of ETF/MF from fund houses and to R1 from R100 per lakh on redemption of ETF/MF from exchange

MF advisors registered with the Association of Mutual Funds in India allowed to be members of mutual fund segment on exchanges

This will enable them to expand their business and increase the volume of trade in mutual funds or exchange-traded platforms

Pension and provident funds allowed to invest in ETF, debt mutual funds and asset-backed securities:

This will benefit the mutual fund industry by bringing in more inflows, while improving the liquidity of ETFs on the exchanges. It will also give pension and provident funds greater flexibility to invest their funds

Dividend distribution tax (DDT) and surcharge raised:

The surcharge on DDT for all mutual fund schemes has gone up from 5% to 10%. In order to provide uniform taxation for all types of funds, other than equity oriented fund, the Budget proposes to increase the rate on distributed income from 12.5% to 25% in all cases where distribution is made to an individual or an HUF. This will impact the net returns on dividend schemes of all mutual fund schemes for the investor

Dedicated debt segment on stock exchanges:

The Budget states that with the objective of developing the debt market, stock exchanges will be allowed to introduce a dedicated debt segment on the exchange.

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