MAKE TAX TREATMENT EQUITABLE
My income from bank deposits is taxed at rates applicable to appropriate slab. Likewise, interest on corporate or government bonds directly held by me is also taxed on the same basis. But my income from mutual fund debt schemes is tax exempt – though such income is derived from investments in banks, government or corporate securities. Evidently there is an anomaly. There is no justification for such exemption. Exemptions of this nature also cause distortions in the capital flows within & between sectors. In the formative years, such exemptions were granted to encourage mutual fund industry grow. Now that the industry has matured, there is no case for persisting with such undue concession. One might as well argue that mutual fund income often includes capital gains. Hence, mutual funds should be required to show the split-up on the warrants so as to enable tax payer to account for such income. The honourable minister of finance will do well to plug these & other leakages than resort to more dangerous resort to the printing press.
Dr. M. Narayana Bhat, Economist
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