The Confederation of Indian Industry (CII) wants the government to reform tax rules for investments trusts in the forthcoming Budget to provide an impetus to their growth.
The industry body said that Alternative Investment Funds (AIFs), Securitisation Trusts and Asset Reconstruction Companies (ARCs) Trusts are crucial to generating long-term funds for economic growth, and therefore deserve fair tax treatment, according to a PTI report.
"The current regime for taxation of such investment pools is replete with tax asymmetries resulting from risk of uncertainty and multiple taxation. For such trusts to effectively deliver their objective...there is an urgent need to provide them with a conducive tax regime," the body said.
Finance Minister Arun Jaitley would be presenting the NDA government's first full Budget on 28 February.
Alternative Investment Funds are collective investment pools formed as trusts to provide risk capital to small and medium busienss enterprises, even large companies, most of which are not listed and therefore find it difficult to raise funds from the market.
Asset Reconstruction Companies (ARCs) buy non-performing assets of lenders so that they are not saddled with bad loans. The ARCs then manage the loans, reschedue the debts and settle the dues payable by the borrower, generally by selling the assets to a new buyer.