Govt may heed MFs, amend Finance Bill to offer tax relief for debt funds

After mutual funds raised a furore over provisions in the Finance Bill, the Finance Minister Arun Jaitley could reportedly offer some relief in the form of amendments to the Finance Bill.

CNBC-TV18 quoted unnamed sources as saying that the Finance Minister could give his final decision on giving 'some relief' to mutual funds in a day.

The sources said that the government is considering tax relief for debt-based mutual funds and redemptions in some schemes may even get tax relief.

 Govt may heed MFs, amend Finance Bill to offer tax relief for debt funds

Representational image. Reuters

The mutual fund industry had been cut up over some provisions in this year's union budget which had resulted in making Fixed Maturity Plans (FMPs), that primarily invest in debt instruments, relatively unviable to investors. FMPs are closed ended funds that aim to lock in returns for investors by investing mainly in debt securities.

Unlike bank fixed deposits, FMPs were earlier taxed as a debt security that is eligible for long term capital gains of 10 percent without indexation or 20 percent with indexation if held for over 12 months.

Among other changes the government may make to the Finance Bill include introduction of advance ruling systems for resident taxpayers and enlarging the scope of the Income Tax settlement commission.

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Updated Date: Jul 22, 2014 14:50:42 IST