Mutual Funds: Rollover of MFs beyond 36 Months Not Capital Gains: CBDT
In a major relief to investors, the rollover of fixed maturity plans (FMPs) offered by fund houses beyond 36 months will not attract capital gains. A tax of 20% will be charged at the time of redemption of FMPs. The Central Board of Direct Taxes has issued the clarification with regard to taxation on rollover of FMPs beyond 36 months. FMPs are closed-ended funds having a fixed maturity date where the duration of investment is decided upfront.
 
Finance minister Arun Jaitley had last increased the concessional capital gains tax rate from 10% to 20% on debt-oriented MFs and also the holding period from 12 months to 36 months. Short-term capital gains are taxed at the rate of individuals.
 
As a result, gains arising out of any investment in FMPs made before 7 July 2014 and sold/ redeemed after the date would be taxed as short-term capital gains if the investment was held for a period of 36 months or less.

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Mediclaim: IRDAI Fines Reliance General Insurance for Not Paying Directly to Insured
IRDAI (Insurance Regulatory and Development Authority of India) has imposed a Rs5-lakh penalty on Reliance General for not making direct payments on health insurance claims to policyholders and routing them through third-party administrators (TPAs).
 
IRDAI said that it is in violation of the norms on standardisation of health insurance. IRDAI’s norms provide for payment to network providers and settlement of claims of policyholders by making direct payments to them and integrating their banking platform with the network provider or the insured. A TPA is not allowed to settle claims on behalf of the insurer.

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Retirement: Mutual Funds Line Up Retirement Plans
Encouraged by tax incentives for investment in retirement schemes floated by mutual funds (MFs), several fund houses, including IDBI MF, Birla Sun Life MF, DSP Blackrock MF, Axis MF and SBI MF, have approached Securities and Exchange Board of India (SEBI) to launch retirement-linked MFs.
 
Reliance Capital Asset Management Company had taken government approval for the first-ever equity-oriented pension scheme, in December 2014, giving tax benefits to investors.
 
Retirement funds floated by fund houses have been given tax benefits in line with pension funds, to attract long-term domestic savings into the equity market in the Finance Act 2015.
 
Earlier, only insurance companies were allowed to offer pension products with tax incentives. Investments in these schemes are eligible for a deduction under Section 80 C of Income-Tax Act up to a limit of Rs1.5 lakh.

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