AMFI Chief Seeks To Extend Tax Breaks To Investments Abroad

Kochi: One of the primary reasons why Indian mutual funds and retail investors are still not infusing heavily in capital markets abroad is because these investments do not enjoy the tax breaks that are available to investments in Indian companies. Despite the liberalisation and globalisation of the economy, it is still compulsory for Indian mutual funds and asset management companies to infuse up to 65 per cent of their assets in Indian companies to enjoy the benefits of dividend and capital gains tax-breaks. AMFI has now given a offer to SEBI and Government of India, which could enable 100 per cent foreign investments by mutual funds and retail investors to enjoy similar tax-breaks. This is the prime reason why the recent declaration by the Government enhancing the foreign investment limits from $3 billion to $4 billion and individual fund limit from $150 million to $200 million in foreign capital markets did not elicit much response.
In order to use this enhanced facility, AMFI was thinking of creating new schemes for mutual funds, which will offer custom-built investment solutions for high net worth resident Indians to invest abroad. The real estate Mutual Funds are hoped to infuse in real estate companies, the debentures/bonds of these companies, its mortgage backed securities and its securities paper. This will enable the common man to participate in country's real estate boom. The mutual fund industry has taken effective steps to reach out to the retail sector and has opened 80 lakh accounts in 2006-07 through 1,300 outlets.