Sebi pushes tax sops for equity MFs

New Delhi: A day after PM Manmohan Singh spoke about reviving mutual funds, the Securities and Exchange Board of India (Sebi) on Thursday said it would pitch for additional tax sops for investment of up to Rs 50,000 in equity schemes by individuals, instead of reintroducing entry load that will hit consumers hard. 

    Officials said the tax benefit could be added to the Rajiv Gandhi Equity Scheme announced in the budget, which is targeted at those who buy shares and stay locked in for three 
years. For new retail investors with taxable income of up to Rs 10 lakh, the Centre has allowed up to 50% tax deduction on investment of up to Rs 50,000. 
    Although Sebi had made the plea to ex-finance minister Pranab Mukherjee, no decision was taken. There is a perception that retail investors are not well equipped to deal with direct investment in shares and will be better off using the MF route—an argument that has not found favour with the finance ministry. Sebi wants PAN scrapped for foreign retail investors 
New Delhi: Sebi, which favours additional tax sops for investment of up to Rs 50,000 in equity mutual fund schemes, is arguing that expanding the scope of the Rajiv Gandhi Equity Scheme to mutual funds will not just boost retail participation but also help it emerge as a segment that can counter the might of foreign institutional investors. 
    Identifying revival of investor sentiment as a key focus area, PM Manmohan Singh had on Wednesday asked the finance ministry to work on two areas of investment — mutual funds and insurance. Sources said apart from boosting mutual funds, the market regulator and the economic affairs department in the finance ministry are pitching to do away with the requirement for foreign retail investors to get a PAN card from local authorities. "Will an Indian invest in Brazil if he or she is first asked to register with the tax authorities there?" said an official. 
    Sources said Sebi was also making a case for imposition of levy on commodities trading, on the lines of the securities transaction tax — it feels this will shift some money parked in another market to equities.