As part of its first-ever long-term policy for the mutual fund industry, market regulator SEBI on Thursday proposed doubling of saving limits for investors to avail tax benefits under Section 80 C.

SEBI has recommended that the limit be doubled to ₹2 lakh to make mutual fund products such as Equity-Linked Saving Schemes and Mutual Fund-linked Retirement Plans a priority for investors.

The Rajiv Gandhi Equity Savings Scheme can also be brought under the enhanced limit, it said.

To promote pension products by MFs, the policy has mooted the introduction of a long-term product, such as a Mutual Fund-linked Retirement Plan, with an additional limit of ₹50,000 under the Income Tax Act.

These recommendations are “primarily on the premise that any long-term investment instrument should get similar treatment whether you are investing through insurance, pension, or a long-term mutual fund product,” said SEBI Chairman UK Sinha, after the board meeting.

SEBI has also decided to raise the minimum capital requirement for asset management firms to ₹50 crore from ₹10 crore. “There are 19 companies with less than ₹50 crore capital and 6 per cent share in total assets under management. They have been given three years to reach that level,” said Sinha. AMCs will be required to invest 1 per cent of the amount raised (subject to a maximum of ₹50 lakh) in all open-ended schemes during their life time.

“All these measures are supposed to bring more transparency in the working of the mutual fund industry,” he said.

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