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Govt to amend UTI Act, provide relief to MFs

The government on Thursday proposed further amendment of UTI Act while extending a host of relief measures to the mutual fund industry.

"The long overdue reform for making US-64 net asset value-based has been implemented. Further legislative changes in the UTI Act to put in place other major reform measures will be proposed during the year," Finance Minister Yashwant Sinha said in Parliament presenting the Budget for 2002-03.

He said a package of measures for reforming UTI and its flagship US-64 scheme had been announced, which seeks to balance investors' interest while ensuring systemic safety.

"The support to equity-oriented funds of UTI and other mutual funds will continue but the income received during 2002-03 by unit-holders of such funds will be taxed only at 10 per cent as at present," Sinha said while presenting direct tax proposals.

The government also abolished the 10 per cent Distribution Tax on companies' and mutual funds' dividends or income.

"Such income will henceforth be taxed at the hands of the recipients at the rates applicable to them and will be subject to tax deduction at source at the rate of 10 per cent," Sinha said while presenting the direct tax proposals.

The Budget also allowed mutual funds to invest in rated securities in countries, which have fully convertible currencies within the existing limits.

Earlier, mutual funds were allowed to invest in ADRs/GDRs issued by Indian companies in overseas market.

PTI

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