AMFI Expresses Concerns Over New Debt Tax Rule’s Impact on Mutual Fund Industry
Delhi, 27th March 2023: The Association of Mutual Funds of India (AMFI) is planning to approach the Ministry of Finance to express its concerns about the impact of the new debt tax rule on the mutual fund industry. The Finance Bill 2018 introduced a provision which levies a dividend distribution tax (DDT) of 10% on dividends distributed by mutual funds from their debt schemes.
The new rule is likely to have an adverse effect on the mutual fund industry as it could lead to a significant reduction in the dividend payouts to investors. This could, in turn, discourage retail investors from investing in debt mutual funds, which could impact the overall growth of the industry.
The AMFI has expressed its concerns over the new rule and has planned to write to the Ministry of Finance regarding the same. The association is likely to request the government to reconsider the new rule and instead introduce a uniform tax regime for all types of mutual funds.
The AMFI has also stated that the new rule could result in a shift of investments from debt mutual funds to other investment options, such as fixed deposits, which could impact the overall liquidity in the market.