Budget 2019: remove long term capital gains tax on equity mutual funds, say fund managers

Finance minister Nirmala Sitharaman is scheduled to present her maiden budget on July 5. ETMutualFunds.com spoke to some prominent mutual fund managers to find out about their expectations from the budget. Most fund managers are eagerly waiting for the budget as they believe it is coming at a critical juncture when growth is faltering. However, they are also hoping that the finance minister would take some measures that will help the mutual fund industry.

Harsha Upadhyaya, CIO (Equity), Kotak Mutual Fund
"For macro-economic stability of a nation, it is always desirable to promote a domestic savings driven investment led growth model. In line with this, we expect government to focus on reviving household savings rate, especially through financial assets in the country. Traditionally, due to various incentives or even otherwise, most Indians have invested in physical assets. To encourage more investments in mutual funds, Section 54EC benefit should be extended to cover mutual fund investments too, with suitable lock-in provisions. In our opinion, this will enhance flows into mutual funds, thus channelizing retail investments into long term productive capital.


Long term capital gains tax on equity investments, which was introduced last year has not yielded any improved tax collections given subdued broader market. Equity investments are still at a nascent stage in our country, and hence removing long term capital gains taxation will enable higher penetration of equity investment in the country. It can be reintroduced at a later stage after better penetration levels are achieved."

A Balasubramanian, CEO, Aditya Birla Sun Life Mutual Fund
"Union Budget is coming at a time when the economy is faced with a lot of challenges threatening the growth momentum. I believe the Budget would stick to fiscal discipline and focus more on increase in collection efficiency. While doing so, they may also address the need to boost consumption by cutting tax rates for middle class population. In order to create more employment and create demand for related ancillary sectors, construction and housing sector may get attention in this budget."

S Naren, ED & CIO, ICICI Prudential Mutual Fund
"Post elections, our outlook on equities has improved, as it has been observed that whenever the election outcome is favorable equity as an asset class tends to do well. However, over long term, markets seek direction from macro-economic indicators which highlight the overall health of the economy. In the upcoming budget, the government may announce steps to address rural distress, boost farm income apart from rolling out long-term transformational plans for the country. " Read S Naren's full interview here: Some pockets in mid, small caps have turned attractive, S Naren of ICICI Pru Mutual Fund