NEW DELHI, Jan 19: Industry body Amfi has asked the government to introduce a mutual fund-linked retirement plan on the lines of highly-popular 401k pension plans in the US.
The 401k plans are very popular in the US and act as additional retirement savings for citizens beyond pension plans provided by the government and their employers. Along with tax benefits, these plans are also known to provide good returns to their investors.
Schemes similar to 401k of the US can be found in many other jurisdictions internationally, whereby, tax-related and other incentives provided by the government have led to significant increase in share of long-term retail money in mutual funds.
In its budget proposal to the Finance Ministry, Association of mutual funds in India (Amfi) also proposed debt-linked savings scheme should be given tax benefits under Sec 80 CCC of Income Tax Act, sources said.
Presently, only equity-linked savings schemes (ELSS) qualifies for tax benefits under Section 80 CCC of the Income Tax Act, for an investment limit of up to Rs 1.5 lakh in a fiscal year.
Also, the mutual fund body made a proposal to extend the tax benefits available under Rajiv Gandhi Equity Savings Scheme (RGESS) to all equity fund investors, they added.
To promote investments in equities, the government had introduced RGESS in 2012 for first-time investors with annual income below Rs 12 lakh a year.
Further, AMFI has proposed for extending Sec 54 EC benefit for mutual fund schemes with lock-in period of 3-5 years. Section 54 EC of Income Tax Act, 1961 provides an option to save tax on capital gain arising from transfer of long-term capital asset subject to certain conditions. (PTI)