Clarification on schemes' merger in Budget relieves mutual fund investors

Industry executives say it will further boost consolidation of schemes

In a relief to the mutual fund investors when it comes to merger of schemes, the government has proposed in Union budget to take into consideration the holding period of the units held in the erstwhile schemes for taxation purposes. Further, the cost of acquisition of the units in the consolidated plan will be the cost of units in the merged plan. The amendments will come into effect from April 1, 2017 and will be applicable in the assessment year 2017-18.

Given the stricter norms by the capital market regulator forcing mutual fund houses to merge their various schemes, the government