Budget 2020: Amfi seeks similar tax treatment for Mutual Funds, Ulips

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Updated: January 17, 2020 1:14:13 AM

Union Budget 2020 India: In 2012, Sebi had asked fund houses to provide separate plan for direct plans which will have lower expense ratio benefiting the investors.

Union Budget 2020 India, Budget 2020 India,Budget 2020-21: Amfi is of the view that capital gains arising from switching units from regular scheme to direct scheme should be abolished.

Budget 2020 India: Ahead of the Union Budget 2020-21, Association of Mutual Funds in India (Amfi) has shared a memorandum with the finance ministry which includes 17 proposals for the development of the
MF industry.

In its proposal, Amfi has sought similar tax treatment for MFs and unit linked insurance plans (Ulips) along with introduction of debt-linked saving scheme (DLSS) to deepen the Indian bond market. The industry body has sought uniform tax treatment for pension schemes of mutual funds and National Pension Scheme (NPS).

Amfi is of the view that capital gains arising from switching units from regular scheme to direct scheme should be abolished. In 2012, Securities and Exchange Board of India (Sebi) had asked fund houses to provide separate plan for direct plans which will have lower expense ratio benefiting the investors. However, if investors want to switch from regular plan to direct plan within a mutual fund scheme they are subjected to capital gains tax.

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“It is submitted that switch transactions within the same mutual fund scheme should not be regarded as transfer and hence, should not be charged to capital gains tax,”Amfi has said. Even switches from various investment plans of same Ulips are not subjected to capital gains tax. With regard to similar treatment of MFs and Ulips, Amfi has laid out various points like similar tax treatment on capital gains and removal of tax arbitrage on account of Securities Transaction Tax (STT).

Do you know What is Finance Bill, Short Term Capital Gains Tax, Fiscal Policy in India, Section 80C of Income Tax Act 1961, Expenditure Budget? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

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