LTCG impact: Equity MF inflow down 59% to Rs 66.57-billion in March

Equity mutual funds witnessed a net inflow of Rs 66.57 billion in March, a plunge of 59 per cent from the preceding month, due to volatile stock markets along with profit-booking by investors to avoid payment of LTCG tax.

According to a report by rating agency Icra, equity funds, including equity-linked saving schemes saw monthly net inflow of Rs 66.57 billion in March, down from Rs 162.68 billion infusion seen in February.

"The fall could be due to volatile equity markets and profit-booking by investors to avoid paying long-term capital gains (LTCG) tax before the new tax rules came into effect from April 1, 2018," the report noted.

Finance Minister Arun Jaitley, in his budget speech, had announced LTCG tax of 10 per cent on equity gains beginning February 1, 2018 - on gains exceeding Rs 100,000.

Later, the government clarified that the proposed LTCG tax on equity holdings will apply on profits made from sale of shares on or after April 1, 2018.

Despite the volatility, equity funds saw robust net inflow of Rs 1.71 trillion in the gone-by fiscal.

In the eleven-month period ended February, 2018, cumulative Systematic Investment Plan (SIP) contribution was Rs 600.71 billion.

Overall, mutual fund schemes saw a net inflow of Rs 2.72 trillion in 2017-18, much lower than Rs 3.4 trillion seen in the previous financial year.