This year is going to be another year of innovation and new launches for mutual fund industry as SEBI has announced a draft proposal to form Real Estate Investment Trust (REIT). These proposed guidelines once approved will pave the way for SEBI (Real Estate Investment Trust) Regulations, 2008.

Once regulation comes into effect, it will give a new outlook for real estate investments through REITs. Year 2007 saw onset of a number of new themes like Gold ETFs and International Equities Funds and Year 2008 may be a year of REITs.

While the major decisions are taken by regulators outside the budget, we expect Union Budget 2008 as an investor friendly and a directive budget on some policy issues. Some of the key expectations from the budget from mutual fund and financial planning industry are being given herein below. 

·        Incentives for equities should be continued and the status quo on long-term capital gain tax and STT should be maintained.

·        Section 80 C deduction for tax saving should be raised from the current limit of Rs 1 lakh and Equity Linked Saving Schemes from mutual funds should be given the benefit of the same.

·        Individual as well as corporate tax rates should be eased since we are witnessing record tax collections in both direct as well as indirect taxes.

·        Proposed REITs investment should be given a favorable tax treatment to boost investment in real estate sector.

·        Norms for dedicated infrastructure funds should be finalized regarding which announcement was made in last Union Budget.

·        Existing open-ended equity schemes of mutual fund industry should be included for the purpose of tax savings wherein a lock-in period of three years can be introduced in separate plan of same schemes.

·        Dividend distribution taxes on Money Market Mutual Funds which was increased last year should be brought back to earlier levels.