BUDGET PROPOSALS 2018-19 AMFI MF Units to be notified for as Long-Term Specified Assets for exemption on LTCGs under Sec. 54 EE - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Friday, January 26, 2018

BUDGET PROPOSALS 2018-19 AMFI MF Units to be notified for as Long-Term Specified Assets for exemption on LTCGs under Sec. 54 EE


AMFI-  Association of Mutual Funds in India
BUDGET PROPOSALS FOR FY 2018-19

Mutual Fund Units to be notified for as Long-Term Specified Assets for exemption on Long-Term Capital Gains under Sec. 54 EE


Background

In the Finance Act 2017, a new Section 54EE has been inserted in the Income-tax Act, 1961 to provide exemption from capital gains tax, if the long term capital gains proceeds are invested in units of specified fund, as may be notified by the Central Government.
“Long term specified assets” means unit or units, issued before April 1, 2019 of such fund as may be notified by the Central Government in this behalf.
The investment in the units of the specified fund shall be allowed up to ₹ 50 lakhs, subject to a lock in period of three years.

Proposal

It is recommended that Units issued by Mutual Funds that are registered with SEBI, having a lock-in for three years may be notified as “Long term specified assets” under Section 54EE.
Further, the investments in mutual fund units could be permitted in both equity oriented or debt oriented funds, based on investors’ choice & risk appetite, with a lock in period of three years.


Justification

In 1996, the Government had introduced Sections 54EA and 54EB of the Income Tax Act, 1961, with a view to channelize investment into priority sectors of the economy and to give impetus to the capital markets.
Under the provisions of these sections capital gains arising from the transfer of a long-term capital asset on or after 1st October, 1996, were exempted from capital gains tax if the amount of net consideration (Section 54EA) or the amount of capital gain (Section 54EB) was invested in certain specified assets, including mutual fund units, redeemable after a period of three years. (Notification No. 10248 [F. No. 142/58/96-TPL], dated 19-12-1996).
However, the said Sections 54EA and 54EB were withdrawn in the Union Budget 2000-01.
Hence, notifying the mutual fund units as Long term specified assets under Section 54EE would encourage individual tax payers to invest in capital markets via mutual funds, and help to channelize long term household savings into Capital Market.

BUDGET PROPOSALS 2018-19 AMFI MF Units to be notified for as Long-Term Specified Assets for exemption on LTCGs under Sec. 54 EE Reviewed by S. Chitra on January 26, 2018 Rating: 5 AMFI-   Association of Mutual Funds in India BUDGET PROPOSALS FOR FY 2018-19 Mutual Fund Units to be notified for as Long-Term Spec...

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