Delhi based IFA Association Delhi Financial Distributors Association (DFDA) has sent its Budget wish list to Minister of State for Finance Jayant Sinha.
Here are DFDA’s recommendations:
1. There should also be a single digital KYC for all financial instruments.
2. The government should form a self-regulatory organization of distributors and set a target of creating 1 million financial distributors in the next one year under the ‘Skill India’ campaign.
3. Education
- While tuition fees gets a deduction, long term savings for education should also get tax benefits.
- Just like 529 investment plans in the US, there should be child education funds that offer tax deductions on the contributions. To ensure that the corpus is not used for other goals, SEBI can ensure that the fund house makes the payment directly to the educational institute in which the child takes admission. Regular/other withdrawals should be made taxable and cash up to desired limits should be permitted.
4. Include mutual funds in Section 54EC. At present, Section 54EC of the Income Tax Act lists the cases in which capital gains tax from long- term assets (held for more than three years) need not be charged if the gains are invested in certain specified areas. Currently, mutual funds are not included among these specified assets which include bonds issued by National Highways Authority of India, Rural Electrification Corporation, etc. This will allow the flow of long term money in the industry through which open end equity funds would have subscriptions locked in for a reasonably long period of time.
5. The 65% minimum limit of investment in Indian equities for getting the scheme classified as an equity fund for tax purposes should be reduced to 40%. This will go a long way in acceptability of mutual funds among investors who are generally risk-averse.
6. While dividends are not taxed for equity schemes, they are taxed in debt funds through a dividend distribution tax. Dividends from debt funds should be made tax- free up to an investment of Rs 2 lakh.
7. Ceiling of Rs. 1.5 lakh should be raised to Rs. 2.50 lakh for all eligible investments under Section 80C.
8. Deduction under Sec 80CCF should be re-introduced for investment in infrastructure bonds up to Rs. 50,000.
9. A Voluntary Disclosure of Income Scheme (VDIS) scheme can be planned wherein people can invest cash in specified funds with 10-year lock in and pay tax on gains at the time of withdrawal.
10. Annual Information Report (AIR) of Rs. 2 lakh in mutual fund should be removed.
11. If under construction properties are not delivered within three years, home buyers cannot claim deduction for interest on housing loan beyond Rs. 30,000. Thus, the government should increase tax break cap to five years.
