Restore Balance

In the past year or so pensioners and other small investors have been finding that their investments in mutual funds fetched lower or nil income, while their capital investment steadily declined in value. Many of them have opted to cut their losses by going back to fixed deposits with banks etc, where income is assured and capital is safe. With the reduction in the ceiling for such income, they face the dilemma of either sacrificing income tax exemption on Rs 1,000 of interest income (representing around Rs 9000 of capital) or investing that amount in company shares or mutual funds with uncertain prospects.

 

In fairness to such small investors, the balance should restored. Either the Rs 3,000 exemption for income for investments in company shares and mutual funds may be in addition to the previous Rs 13,000 or the reservation may be limited to Rs 2,000.