Changes in taxation in the Union Budget on Monday will be watched closely by market participants. While few have a clue on what the government will do on the taxation front, the Securities and Exchange Board of India ( Sebi) has sent the few proposals it received to the finance ministry. These include, simplification of taxation for alternate investment funds, mutual funds and real estate investment trusts. Some of the suggestions are:
Alternate Investment Funds (AIFS)
The tax rules applicable to investment funds in the Income Tax Act should be extended to all categories of AIFs.
The exempt income of AIFs should not suffer tax withholding of 10 per cent.
Investment gains of AIFs should be deemed to be capital gains in nature.
Mutual Funds Tax incentive for mutual fund linked retirement plan (MFLRP)
An additional tax benefit of Rs 50,000 should be allowed. This additional limit should be over and above the existing limit of Rs 1,00,000 under Section 80C of IT Act,1961.
