Industry body seeks tax reforms for investment trusts

Pitching for reforms in tax rules for investment trusts, industry body CII today said the Union Budget should focus on stability and certainty in taxation for growth of these entities.

The first full budget of the new government should consider reforming taxation rules for effective functioning of Alternative Investment Funds (AIFs), Securitisation Trusts and Asset Reconstruction Companies (ARCs) Trusts, CII said.

"AIFs, Securitisation Trusts and ARC Trusts are pools of long term capital and at the core of the solution for providing investment funds to the economy. The current regime for taxation of such investment pools is replete with tax asymmetries resulting from risk of uncertainty and multiple taxation," CII said.

"For such trusts to effectively deliver their objective of providing long term funds to the economy there is an urgent need to provide them with a conducive tax regime," CII Director General Chandrajit Banerjee said.

AIFs are collective investment pools set up as trust and are crucial providers of risk capital to small, medium as well as large companies, most of whom are unlisted companies.

Asset Reconstruction Companies (ARCs) on the other hand help in facilitating smooth operation of financial institutions and banks.