The Association of Mutual Funds of India (Amfi) has an elaborate 17-point wishlist from the upcoming Union Budget for the financial year 2020-21 to make mutual funds more retail investor-friendly.
Among their many proposals Amfi has suggested the introduction of "Debt Linked Savings Scheme" (DLSS) with a lock-in period of 5 years (to bring it at par with 5-year tax-saving FD) and tax benefit on investments up to Rs 1.5 lakh. The idea is to increase participation of small investors in the bond markets at lower costs while helping them lower risk. Higher participation will also allow large borrowers like the government to raise funds from the market.
The organisation seeks uniform tax treatment of pension schemes of mutual funds and NPS (National Pension System) to target a wider customer base that is outside the distribution reach of the government-run pension system.
Further, to make Gold ETFs a more attractive alternative over physical gold, Amfi has suggested lowering the holding period for LTCG purposes from 3 years to 1 year, as in the case of debt securities.
Amfi has also proposed reducing the threshold limit in equity-oriented mutual funds to be restored to 50 percent from the existing 65 percent to be regarded as 'equity-oriented fund' in order to encourage more investors with lower risk appetite to invest.
Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget in the Parliament on 1 February.