Budget 2019: AMFI seeks clarity on segregated portfolio

Ahead of Budget 2019, the Association of Mutual Funds in India (AMFI) released a set of recommendations in a document named 'BUDGET PROPOSALS FOR FY 2019-20'. Some of its requests are listed below:

Association of Mutual Funds in India -

It is requested that suitable clarifications should be issued with regard to the treatment of the Units allotted consequent on segregation of portfolio of a mutual fund scheme in the hands of the unit holder for the capital gains tax purposes that -

A. The allotment of units in a segregated portfolio of a mutual fund scheme is not a Transfer under section 47 of the Income Tax Act.

B. The period of holding of such units shall be reckoned from the date of investment by the investor {with suitable explanation under Section 2 (42A)}.

C. The cost of acquisition in case of Main scheme and Segregated portfolio shall be the proportionate cost as determined on the date of segregation for the purposes of section 49.

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It is requested that suitable clarification may be issued that – switching of Units from Regular Plan to Direct Plan or vice-versa and Growth Option to Dividend Option or vice versa, within a scheme of a mutual fund shall not be regarded as transfer and hence, shall not be charged to capital gains, by inserting a new sub-section under Section 47 of the Income Tax Act, 1961.

Read the full document here: