The Hindu Business Line : Assocham seeks ceiling on investment in Govt saving schemes

THE Associated Chamber of Commerce and Industry (Assocham) has urged the Government to place a ceiling on public investments in the Government's promoted savings schemes such as Kisan Vikas Patra, monthly income schemes of post offices and senior citizens savings schemes.

Putting a ceiling would promote larger public investments in mutual funds, according to a paper brought out by the chamber on the mutual funds industry.

The paper, submitted to the Finance Ministry, suggests the ceiling to be Rs 3 lakh. The paper says that households continue to invest about 2-5 per cent of their savings in capital market instruments and therefore there is a need for providing some incentives for the retail sector (households) to invest in capital markets through the mutual funds schemes.

The paper also says mutual funds provide higher returns against a return of 7.5-9 per cent in these Government savings schemes, besides providing liquidity to the investors.

As regards the securities transaction tax (STT) and the removal of double taxation on equity schemes of mutual funds, the paper seeks levy of STT to be discontinued on units issued by equity schemes of mutual funds and units of exchange traded funds to avoid multiple taxation. It also suggests retaining the tax concession in respect of capital gains to units of such schemes.

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