Investors could lap up ULIPs to skirt LTCG tax: Morgan Stanley

#Business #EconomyWith the Budget spooking the market sentiment with the 10 percent long-term capital gains tax on equities gains, American brokerage Morgan Stanley has opined that life insurance products, particularly Ulips could be relatively attractive from a medium-to-long-term.

The Dalal Street has been bleeding in since the Budget announcement, after the finance minister sought to reintroduce the long-term capital gains (LTCG) tax on equity investments at 10 per cent on profits in excess of Rs 1 lakh.

It also has slapped a 10 per cent distribution tax on long-term capital gains from equity mutual funds. That apart there is also a dividend distribution tax at the hands of the receiver.

While on the day of the Budget, the market was on see-saw ride and closed marginally down, the next day (on Friday), it saw the worst plunge since November 2014 with a massive 2.3 per cent drop.

"We believe against the given backdrop, life insurance products, particularly Ulips (unit-linked insurance plans) could appear relatively attractive from a medium- to long-term perspective,” Morgan Stanley said in a weekend note.

"Taxation of insurance products is governed by section 10d (of Income Tax Act), where the income is tax-free in the hand of the investor at the time of withdrawal.

"We await the Budget fine-print for further clarity, but if the above details are accurate, it should benefit private players like ICICI Prudential Life and HDFC Life," it said.

Meanwhile, mutual fund experts are of the opinion that the taxation move on equity gains as well as on dividends from mutual funds could pose a small hurdle for investment flows into MFs.

But they warned that the move could impact long-term investments in the segment and said government should look at the possibility of people moving into Ulips to avoid the tax.

The benchmark Sensex plummeted 840 points last Friday -- its biggest single-day fall in two-and-a-half years -- while the Nifty tanked below the 10,800-mark as the sell- off continued for the second straight day after the Budget.moneycontrol

Comments

Post a Comment

Popular posts from this blog

Top features why a dedicated WordPress hosting is best for your website

Dedicated servers are often looked upon as over-expensive web hosting solutions. You may consider them an overkill for your business, but there is no denying the fact that they are the best hosting solution out there. Today, we will tell you some features of a dedicated WordPresshosting that makesit the best for your business. Reliability This is the key factor why most businesses choose a dedicated WordPress server hosting to host their website. A dedicated WordPress hosting server is administered and maintained by a team of professionals who provide online support and work towards optimising the performance of the server. Unlike shared and VPS hosting plans which give you access to limited resources, dedicated server hosting provides a good hosting support. This in turn increases the reliability. Scalability Every business aims to grow their customer base and increase revenues. However, with the limited resources provided by theshared hosting, it can be challenging to handle the high...
Read more

Elon Musk's "Use Signal" Post Spurred Massive Rally For The Wrong One

A two-word app recommendation from Elon Musk has turned into a massive rally in the shares of a tiny medical device company in another case of mistaken identity. “Use Signal,” the Tesla Inc. chief executive officer wrote on Twitter on Jan. 7, apparently referring to the encrypted messaging service. By the end of the day, Signal Advance Inc. shares had surged more than sixfold. That was enough to push Signal Advance’s rally more than 5,100% in three trading days giving it a market valuation of $390 million. Despite reports about the confusion on Friday, the stock has continued to rally. Shares of the Rosharon, Texas-based company surged as much as 885% on Monday before paring the gains. “We strongly recommend people do their due diligence and always invest with care,” the company’s chief executive officer, Dr. Chris Hymel, said when reached by phone on Monday. Signal Advance doesn’t have an association with Musk or the Signal app, he said. Signal...
Read more

RBI Policy: MPC may keep policy rate unchanged at 6%; owl may sound hawkish

N- Urjit Patel, Governor of the Reserve Bank of India (RBI), and his five colleagues on the Monetary Policy Committee will not find it too hard to keep the key policy interest rate unchanged at the upcoming policy review on February 7. The 2-day deliberations on February 6 and 7 by the MPC on the repo rate decision are expected to remain tilted towards a pause mode, keeping the near term outlook hawkish. However, they may raise rates later given the risks of higher inflation with fiscal slippages and higher food prices with the government planning to increase the Minimum Support Price (MSP). In the Budget last week, the government promised to ensure MSP of key crops at 1.5 times the cost of production. This could mean at least a 50-70-basis-points increase in the headline inflation number. While banks and bond markets have already signaled the end of the interest rate easing cycle, the MPC may keep the repo rate unchanged at 6 percent. Inflation risks Although, experts suggest the infl...
Read more