Mutual fund industry body Association of Mutual Funds of India (AMFI) has asked the Finance Ministry for more tax exemptions for retail investors. They want equity-linked savings schemes (ELSS) offered by mutual funds included in the tax exemption available under Sec 80CCG of the Income Tax Act.
This section allows for an exemption of ₹25,000 for first-time investor. However, this is currently available only for first-time equity investors under the Rajiv Gandhi Equity Savings Scheme (RGESS) through the Finance Act 2012.
As of now retail investors with annual incomes below ₹12 lakh creating their first demat account can claim a 50 per cent deduction on a maximum investment of ₹50,000 in approved listed stocks or certain exchange-traded funds run by mutual fund houses. However, this tax exemption mostly goes unutilised and the tax benefit has not expanded the retail investor base as expected. Therefore, AMFI wants this to be extended to ELSS funds.
