MF association urges FM and SEBI to reconsider the tax imposition

The mutual fund (MF) industry has sought level playing field vis-a-vis the unit linked insurance plans (ULIP) after the imposition of the dividend distribution tax (DDT) and long-term capital gains tax (LTCG) in the budget, a top official of the industry body AMFI said.

Association of Mutual Funds in India (AMFI) has already sent representations to the finance ministry and capital market regulator SEBI in the regard, the official said.

"Earlier, the mutual funds were subject to securities transaction tax (STT) only. Now, this budget has imposed DDT and LTCG on mutual funds. It would have been better if LTCG was not there," chief executive of AMFI N S Venkatesh said.

Briefing reporters on the sidelines of an Indian Chamber of Commerce seminar here today, he said AMFI has asked for a level playing field vis-a-vis the ULIPs as these were almost similar instruments like MFs and there were no such taxes on them.

"We have sent representations to both the finance ministry and SEBI to reconsider the tax impositions. Hope something will be done when the Finance Bill gets passed," he said.

Venkatesh said there had not been any impact on the tax imposition on the MF industry so far and the flow to the assets under management (AUM) were normal like before.

Talking about the industry, he said that earlier MFs were sold as a push product. "Now it is changing slowly to a pull product. At present, AUM of the industry is Rs 22.48 lakh crore. If it grows at a compounding rate of 30 per cent each year, then AUM will touch Rs 50 lakh crore in the next four years," he added.

He also warned of mis-selling of MF products by distributors, adding that though the proportion was not alarming.