Tata Mutual Fund has finalised plans for floating an open-ended assured return scheme known as the Tata Income Fund, and has submitted the proposal to the Securities and Exchange Board of India (Sebi).
The scheme would assure a 15 per cent return for the first financial year, payable six months in advance in October every year giving an effective yield of 16.12 per cent per annum.
The scheme will be launched under the new mutual funds regulation of Sebi and will offer liquidity to investors after six months at NAV-based price.
The scheme would offer three options to the investor: One, there would be no lock-in and units can be repurchased, switched or redeemed. Two, On investment under this option within a period of six months after the date of transfer of a long-term capital asset, of the net consideration the capital gain arising from the transfer of a long term capital asset shall not be charged to tax under section 45 of the Income tax Act 1961. Units allotted under this option cannot be repurchased, switched or converted into money freely during the lock-in period of three years.
Under the third option the lock-in period would be for a period of seven years. There would be two options for receiving returns for the investor one a regular income option and the second would be an appreciation option, wherein returns would be reinvested in the scheme.
