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'Reduction In Tax Burden On Debt Funds'

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Lock-in period for tax saving deposits be brought down to three years from the current five years to bring it on par with tax saving equity linked savings schemes and to channelise more funds into the banking sector.
  • Removal of Security Transaction Tax (STT) on equity market or Imposition of Commodity Transaction Tax (CTT) on commodity trading to attract investments in the capital market.
  • Commercial banks to be allowed to issue tax-free infrastructure bonds as has been allowed to other financial institutions as banks have good distribution network to raise funds and can finance infrastructure projects.
  • Tax sops like increasing the Tax Deducted at Source (TDS) limit on fixed deposit to Rs 25,000 which at present tax is deducted at source on interest earned from fixed deposits of Rs 10,000 and above.
  • Tax exemption of Rs 20,000 under Section 80CCF for investing in infrastructure tax free bonds and inclusion of affordable housing sector in the infrastructure segment.
  • Extension of agriculture interest subvention scheme to self-help groups and exemption of social security insurance schemes from service tax.
  • Tax concessions for issuing perpetual bonds, which is counted as Tier I or equity capital.
  • Urban Cooperative Banks be treated at par with those in rural areas.
  • Separate deduction for equity-linked savings schemes apart from the Rs 0.10 mn Section 80C limit.
  • Reduction in the tax burden on debt funds as both long- and short-term capital gains from debt funds are currently taxed, unlike in equity funds, where long-term capital gains are tax-free.
  • Reduction or removal of dividend distribution tax on debt funds as dividends from equity funds are tax-free.
  • Rajiv Gandhi Equity Savings Scheme (RGESS) to be extended to all equity investors and not just first-time investors with the removal of Rs 1.00 mn annual income cap in order to broaden the market for RGESS.
  •  Allowance of income tax benefits on long-term mutual fund schemes such as retirement funds.

Dr Arun Singh, Senior Economist, Dun & Bradstreet Information Services India