Here's a rough guide to what the mutual fund industry prioritizes for the Finance Minister, this time around.
MUTUAL FUNDS
- Bring Equity , International Equity Funds, Gold ETFs under the definition of Equity Mutual Fund
- Minimum criterion for equity oriented mutual fund be bought down from 65% to 50%
- on Corporates and Non Equity and Non Liquid Mutual Funds should be reduced to 10% from 15% at present
- Dividend Distribution Tax on Money Market / Liquid Mutual Funds should be reduced to 10% from 25% at present
- Overseas Investment Limit for individuals and international funds both should be lifted completely
- Increase in Section 80 C limit of Rs 1 lakh
- Dedicated Infrastructure Funds guidelines should be issued so the huge infrastructure funding requirements can be met
- Commodity ETFs should be introduced
- PSUs should be allowed to invest across all mutual funds irrespective of Public/Private Status
- Redefine ‘equity-oriented’ schemes to include funds that invest in securities of foreign listed companies and ADR/GDRs issued by Indian and Foreign companies
- Include all 3-year close-ended equity schemes into the tax deductible bracket
- Reduction in or capital gains exemption on fixed income funds similar to equity funds
- Differential tax incentive (on the lines of equity long term savings) to lure investor’s savings into long-term debt products through mutual funds
- Tax incentives for individuals to save in dedicated infrastructure funds, where money will be locked for a period for investment in infrastructure projects. Maybe a separate exemption limit of Rs. 100,000 can be set-aside for individuals
- Level playing field for MFs vis-à-vis alternative competing instruments, which vie for intermediation into India’s equity and debt markets
MARKETS
- Capital gains and levels should be held steady
- Develop the Bond market akin to vibrant equity market
- Self Regulated Organizations in Capital Markets should be formalized
- Short Selling and Stock lending and borrowing guidelines should be formalized
- More incentives for longer-term savings to enter the capital markets
- should be treated as Equity mutual funds in all aspects
- Indian pension and provident funds be allowed exposure in the Indian stock market.
TAX PROVISIONS
- Some corporate and personal tax rate reliefs
- Personal Tax rates can be reduced, with the zero tax limits hiked, especially for senior citizens and women. Some sort of must be allowed to all individuals in the light of the high consumer inflation we are seeing
- Sec 80 C and limits need to be hiked to allow individuals to get more rebates for buying their own houses
- Surcharge should be removed on personal income tax payers .The of 2% plus 1% should also be removed
- FBT is a cumbersome tax that has added to compliance costs across the system, especially on Business Travel, on sales promotions and on ESOPs needs a re-look. FBT abolishing will be a huge positive for the markets
- Special taxation incentives for style plans to enable individuals to save for their retirement
ECONOMY
- Economic Growth with strong emphasis on de-bottlenecking the economy
- Providing further fillip to exports
- Sops for export oriented industry in the form of easing of indirect taxes, interest rate rebates, duty exemption etc
- Pushing ahead with next generation reforms to attract more FDI flows
- Clear road map for the National level Goods & Services Tax is important. More services to be brought under the Service Tax net and the rate is likely to be increased
- Maintaining the FRBM (Fiscal Responsibility and Budget Management) targets
- Progress on reducing subsidies and more importantly on targeting subsidies better
- Focus on agriculture, education, healthcare and rural development
- Reducing the fiscal deficit through curtailment of expenditure and phasing out of subsidies (keeping in mind that off-balance sheet items such as oil bonds and fertilizer subsidies)
- Addressing the infrastructure bottlenecks with a clearly articulated infrastructure development policy
- Highlight its commitment for primary and higher education
- Reduction in excise duties especially in case of consumer goods like two wheelers, cars, commercial vehicles, personal products, consumer durables.
- Reduction in customs duty for crude oil, coking coal, coke.
- Textile sector needs immediate support in the form of enhanced TUF (Technology Upgradation Fund) support and subsidies. We expect a package on this front. Export benefits and tax sops related to large-scale investments in textile sector
- Auto will seek a reduction in excise duties and enhanced allocation to road infrastructure
- IT will seek clarity on the STPI (Software Technology Parks of India) scheme post 2009
- Pharma will seek R&D expenditure deduction incentives at 150% under to be extended for a period of 10 years at least as these are long gestation expenditures
- Construction companies will seek clarity on provisions
- Food processing companies will seek some tax relief as well
- Tax incentives to developers for affordable low-income and middle-income housing and disincentives for higher-income housing
- Rationalization of the inverted duty structure for the tyre industry
- Reduction in duty on component imports for industrial products
- Income tax benefits, continuation of subsidy scheme, tax sops for Indian seafarers
- Make the case for consolidation in the banking industry even stronger with appropriate incentives in form of tax benefits on mergers.
by Reena Prince
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