Here's a rough guide to what the mutual fund industry prioritizes for the Finance Minister, this time around.
MUTUAL FUNDS
Bring Equity Fund of Funds, 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%
Dividend Distribution Tax 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 Section 80C tax deductible bracket
Reduction in dividend tax 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 STT 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
REITs 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 standard deduction must be allowed to all individuals in the light of the high consumer inflation we are seeing
Sec 80 C and Sec 24 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 cess of 2% plus 1% should also be removed
FBT is a cumbersome tax that has added to compliance costs across the system, especially FBT 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 401(k) 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 Section 35 to be extended for a period of 10 years at least as these are long gestation expenditures
Construction companies will seek clarity on Sec 80 IA 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.
Here's a rough guide to what the mutual fund industry prioritizes for the Finance Minister, this time around.
