Press Esc to close
Saturday 28 May 2016
News updated at 3:13 PM IST
Weather
Max: 32.6°C
Min : 22.5°C
In Bengaluru
Partially cloudy

Sebi bats for tax breaks to attract pension money to market

Mumbai, Dec 26, 2013, (PTI)
Terming tax benefits necessary to attract pension money to the capital markets, Sebi has sought a clarity on taxation policy to be applied to retirement- focused funds to tap this huge pool of capital. PTI File Photo.

Terming tax benefits necessary to attract pension money to the capital markets, Sebi has sought a clarity on taxation policy to be applied to retirement- focused funds to tap this huge pool of capital.

The total size of pension market in India is estimated to have stood at over Rs 1.5 lakh crore in 2010, while it is expected to rise to over Rs 2 lakh crore by 2015 and further to close to Rs 3 lakh crore in 2020 and more than Rs 4 lakh crore by 2025.

This includes individual retirement money, provident fund and other small savings and is based on a study conducted by a government-appointed expert panel.

However, the share of this vast capital pool is almost negligible in the equity markets, although a lot of foreign pension funds including from the US and Canada regularly invest in Indian markets.

Talking about steps required to attract pension money to markets, Sebi Chairman U K Sinha said a favourable taxation framework is crucial for achieving this goal.

"There are two angles here, one is that EPFO (Employee Provident Fund Organisation) money is not coming to the market and the trustees of the EPFO have refused to invest 15 per cent into equities which Finance Ministry has also allowed.

"That is something beyond Sebi's scope of working," Sinha told PTI in an interview.

"The second issue is if others (fund houses) launch pension products, will such products get same tax treatment? The first draft of Direct Tax Code provided for that, but today there is an uncertainty that if a mutual fund launches a pension product, will it qualify for tax exemptions," he said.

"Right now, the answer is, it will not (get tax benefits)," Sinha said, while adding that an assurance of tax benefit is required for pension funds, irrespective of route taken to launch a pension product.

"This was the principle which DTC had enunciated (in its first draft), but that has to be enacted," he said.

Asked on the way out to resolve the issue, Sinha said, "Here, I want to say two things -- one is, we have to continue a dialogue with EPFO and its trustees so that they start investing in equity markets, and the second is, for others to offer pension products, the clarity on tax treatment is very very important."

In the past, Sebi has asked asset management companies or mutual fund houses to launch pension products, so that retirement money can be brought into the capital market.

In September, Parliament cleared a path-breaking pension bill, which, among other things, allows foreign direct investment in the country's pension sector.

Overseas investors can hold up to 26 per cent stake in domestic pension funds pursuant to passage of this bill, which also seeks to extend pension cover to more citizens and provide subscribers a wide choice to invest their funds, depending on their risk appetite. 


Go to Top

Photo Gallery
An elephant herd seen near a village of Mysore city...

An elephant herd seen near a village of Mysore city...

Y Jyothi (R) of Telangana competes to win gold in the 100m girls hurdles...

Y Jyothi (R) of Telangana competes to win gold in the 100m girls hurdles...

Carpenters completing the construction of the wheels for the forthcoming Lord Jagannath Yatra...

Carpenters completing the construction of the wheels for the forthcoming Lord Jagannath Yatra...

Obama stands after laying a wreath at the Hiroshima Peace Memorial Park in Hiroshima...

Obama stands after laying a wreath at the Hiroshima Peace Memorial Park in Hiroshima...

Army personnel take positions during an encounter with the militants at Naugam...

Army personnel take positions during an encounter with the militants at Naugam...

Aishwarya Rai Bachchan during the event organised to celebrate the success of film Sarbjit ...

Aishwarya Rai Bachchan during the event organised to celebrate the success of film Sarbjit ...

Girl takes selfie with Prime Minister Narendra Modi at exhibition on achievements of North East...

Girl takes selfie with Prime Minister Narendra Modi at exhibition on achievements of North East...

Army Jawans leaving after the encounter at Khonchipora village in Tangmarg...

Army Jawans leaving after the encounter at Khonchipora village in Tangmarg...

Bihar Police persons pays tributes  Jawaharlal Nehru on his 52nd death anniversary...

Bihar Police persons pays tributes Jawaharlal Nehru on his 52nd death anniversary...

Akshay Kumar, Jacqueline,  Liza Headen and Abhishek at a promotional event of 'Housefull 3'...

Akshay Kumar, Jacqueline, Liza Headen and Abhishek at a promotional event of 'Housefull 3'...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523