Indian Union Budget 2021-22: There are no more days left to present budget 2021. In such a situation, retail investors also have many expectations from the budget. The year 2020 has been extremely volatile for investors, although the overall performance of the market was strong at the end of the year. But last year, especially mutual fund investors have suffered in many schemes. In such a situation, investors want some relief for themselves in the budget. Experts say that by increasing the scope of the tax scheme in the budget, you can give relief by giving a rebate on dividend tax. At the same time, investors are also expected to get relief through indexation. This has caused some demand for the mutual fund industry for a long time.
Scissors on investors’ returns right now
Explain that apart from LTCG, Long Term Capital Gains Tax, Dividend Distribution Tax i.e. DDT are such taxes which make tax returns on the returns of investors. This reduces the real returns of mutual fund investors. At the same time, tax saving schemes are less in the budget. There has been a demand for a new tax saving scheme for a long time. Debt funds are also in demand.
Scope of the tax-free scheme
In the budget, if the government announces the new scheme of mutual funds with the benefit of tax exemption, then this investment can be increased. The demand for the mutual fund industry is to launch a tax savings scheme in the debt segment as well, in which investment can be exempted under section 80C of the Income Tax Act. If this happens, the attraction of investors will increase further with this segment. In this regard, the Association of Mutual Fund ie Amfi has also sent a proposal to the government for a long time. At present, there is only an equity-linked saving scheme i.e. ELSS in the market, which is being exempted under section 80C of Income Tax Act.
Tax relief on dividend
Investors and experts are expected to get tax relief on the dividend. Experts say that if there is some relief from tax on dividend, then the market participation of retail investors will increase further. Anyway, these days the returns in fixed income investments are declining, in such a situation, after getting tax relief on the dividend, those investors can also turn to equity or equity funds. Earlier, it used to be on the company paying the tax dividend. But later this burden was put on the investors to give relief to the corporate. This will provide a major relief to retired investors in particular.
Indexation benefits are also expected on equity-related mutual funds. If this happens, investors can keep investing in equity funds for a long time. This will give a higher return on long term investment. Right now the government is giving this relief in gold, debt funds and real estate. From 2018, long-term capital gains are taxed at 10 per cent without indexation benefit. Apart from this, there is a demand to unify the scope of ULIPs and equity funds, which will increase the investment in equity funds.
(Note- BNP Fincap based on interaction with DirectAir Corporation)