Also, AMFI has requested the Ministry of Finance to introduce Mutual Fund Linked Retirement Plans (MFLRP).
In its Budget 2016 wish list sent to the Ministry of Finance, AMFI has sought an additional tax exemption of Rs.50,000 for ELSS, confirmed C.V.R. Rajendran, CEO, AMFI.
This additional exemption would be over and above the deduction claimed under Section 80 C i.e. Rs.1.50 lakh. “Since 80 C space is already crowded, an additional tax emption of Rs.50,000 should be allowed in ELSS,” said Rajendran.
AMFI has also requested the Ministry of Finance to introduce Mutual Fund Linked Retirement Plans (MFLRP) under 80 CCD. Section 80 CCD of the Income Tax Act provides tax benefits over and above the 80 C limit, which is currently Rs.1.5 lakh annually. Investors get tax deduction of up to 10% of salary subject to up to Rs.1 lakh on contribution towards pension funds. This is applicable in National Pension Scheme (NPS) currently.
Last year, SEBI had proposed that a long term product like MFLRP with tax incentive can play a significant role in mobilizing household savings into capital markets. Also, in 2013, the draft Budget document had a mention on uniform tax treatment for pension fund and MFLRP.
If implemented, fund houses can launch these products by getting approval from SEBI directly. Currently, fund houses need to take approval of Central Board of Direct Tax (CBDT) on a case-to-case basis to provide tax benefits to investors.
Many fund houses like Axis, DSP BlackRock, HDFC, Pramerica and SBI have already filed draft offer documents with SEBI to launch Mutual Fund Retirement Linked Pension Plans and are awaiting approval from CBDT. Reliance Mutual Fund has launched its tax saving cum pension scheme called Reliance Retirement Fund after receiving pension fund status from CBDT. The other two funds which had received pension fund status long back are UTI-Retirement Benefit Pension Fund and Franklin India Pension Plan.
Both (ELSS and MFLRP) these demands have been pending with the Finance Ministry since a long time now. The mutual fund industry is hoping that their demands will be met in the forthcoming Budget.
