ET NEWS

Mumbai: Retail investors are piling into fund of funds (FoF) schemes, lured by tax breaks, built-in diversification and the ease of tapping multiple fund managers through a single product. Data showed inflows of ₹28,067 crore in just the first five months of this financial year-nearly three times what came in during the whole of 2024-25.Investor interest in this category picked up after the budget, which stipulated that investors holding these schemes for over two years would be subject to a long-term capital gains tax (LTCG) of 12.5%, instead of being taxed at their income slab rate."These work well for investors who want tax efficiency, cannot decide on which scheme to buy, or when to enter and exit," says Madhu Nair, chief executive officer, Union Mutual Fund. 124058664Unlike a normal scheme that holds underlying stocks, bonds or commodities like gold or silver as per its mandate, a FoF is a strategy of holding a mix of mutual fund schemes."This diversification eliminates the need to constantly chase different fund managers, allowing investors to benefit from a broad range of investment approaches and expertise," says Kunal Valia, founder, Statlane - a Sebi-registered Research Analyst.Distributors point out that a very common problem among investors wanting to move from a mid-cap or a small-cap scheme to a large-cap is the tax outgo on account of capital gains, which leaves them with less money to invest. However, in a FoF structure, the fund manager can move from one scheme to another or alter allocation to schemes without tax implications for the investors.There are pure equity FoFs, thematic FoFs that invest in a mix of domestic equity fund schemes/themes or domestic ETFs. While some fund houses stick to their own schemes, a few also invest in schemes of different fund houses, thereby helping investors diversify fund house risk.Besides equity FoFs, there are asset allocator FoFs that invest in a mix of equity, fixed income, and commodities like gold and silver, with the allocation to each asset decided on the basis of the fund house's market view. There are also debt FoFs, such as the income plus arbitrage FoF, which cater to investors in fixed income and arbitrage.While FoFs offer flexibility, they come at a cost. Though FoFs invest in direct plans of the target mutual fund schemes, there is an additional layer of expense for the investor, leading to higher costs, than plain vanilla equity schemes.

NEW DELHI: Hyatt, ITC Hotels, Radisson Hotel Group, and Sarovar Hotels are among hotel chains choosing to keep their room tariffs unchanged and instead pass on the benefits of the reduced goods and services tax (GST) rate to travellers, according to hoteliers, and tariffs on booking and travel platforms on Monday.The Centre has cut the GST rate on rooms costing up to Rs 7,500 per night to 5% (without input tax credit) with effect from Monday, from 12% with input tax credit earlier. A room at the Hyatt Centric Candolim in Goa will cost Rs 5,670 on Tuesday, after adding 5% GST rate, per rates published on a popular travel platform, while Fortune Resort, Benaulim, Goa is charging Rs 4,463, after adding 5% GST for same date."There is no change in our room rates, and we have applied the 5% GST rate on rooms priced up to Rs 7,500 from Monday," said Ajay Bakaya, chairman of Sarovar Hotels and director at Louvre Hotels India. "Out of 140 hotels, about 80 hotels spanning over 5,000 rooms would be priced in this category in our portfolio. I think it's a good move, and we need to look at the benefits from a customers' perspective as well."

New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) has asked its field officials across the country to collect information from dealers and retailers on brand-wise prices of goods such as food, toiletries, stationeries, consumer durables and medicines before and after September 22. The exercise is to check whether they are passing on the benefits of the cut in goods and services tax that came into effect Monday (September 22).They need to collect details such as brand names, size or weight of the products and copies of receipt with maximum retail price and tax breakup before and after the new GST rates took effect. While fast-moving consumer goods and medicines are given time till December for relabelling, the receipts must reflect the new GST rates. The deadline for submitting this information is September 28. The field officials have to send the details to the designated email assigned by each regional office.The officials will also monitor popular ecommerce sites and portals, including Zepto, Instamart, Blinkit, Flipkart and Amazon. "While the big companies and brands have already assured that they will pass on the GST benefits, this exercise will ensure that the benefit is reaching to end customers and is not lost between the factory and the retail shop," a senior official told ET. "While the government is showing trust by not administering strict anti-profiteering measures, we are told to ensure the benefits are immediately and fully passed on to the final consumer," the official added.In a letter dated September 9, the CBIC had asked field officials to give a report on the 20th day of each month on about 54 commodities, including toiletries, consumer durable items, medicine, toys and stationery items among others. This price tracking will continue for at least six months.Experts say the GST rate rationalisation is a direct and meaningful boost for every Indian family, will increase savings and spending power and strengthen household budgets and fuel the consumption story of India. "Taking the example of a person earning ₹50,000 monthly, the price cuts on daily essentials (say spending of ₹25,000 of which there is a rate cut on spending worth ₹15,000) from food to personal care to medical bills are expected to help save approximately ₹1,275 a month," said Saurabh Agarwal, tax partner at EY India.

Chief Economic Adviser V Anantha Nageswaran on Monday said the government would stick to its 4.4 per cent fiscal deficit target and restrict market borrowing at the estimated Rs 6.82 lakh crore in the second half of the current fiscal year. The government had announced borrowing Rs 8 lakh crore through dated securities during the April-September period of 2025-26 to fund the revenue gap. "We are confident of maintaining fiscal deficit and the second half market borrowing will be unchanged," he said at Network18 Reforms Reloaded Summit here. The Union government, in consultation with the Reserve Bank of India is expected to announce a borrowing calender for the second half (October-March) during this week. Fiscal deficit -- the gap between the government's total revenue and total expenditure -- is estimated to be 4.4 per cent of GDP for FY26 as compared to 4.8 per cent of the GDP estimated for the current financial year. To fund fiscal deficit, the government resorts to market borrowings. Out of gross market borrowing of Rs 14.82 lakh crore estimated for 2025-26, Rs 8 lakh crore, or 54 per cent, is planned to be borrowed in the first half (H1) through issuance of dated securities, including Rs 10,000 crore of Sovereign Green Bonds (SGrBs). In absolute terms, the fiscal deficit is pegged at Rs 15,68,936 crore for the financial year 2025-26. To finance the fiscal deficit, the net market borrowings from dated securities are estimated at Rs 11.54 lakh crore. The balance financing is expected to come from small savings and other sources. Nageswaran further said India's FY26 GDP growth will tend towards the upper end of 6.3-6.8 per cent range in FY26, following the GST 2.0 reforms that came effect from Monday. The Economic Survey tabled in Parliament in January had projected real economic growth of 6.3-6.8 per cent for FY26. "The GST 2.0 is a very significant landmark reform. I am very confident that it will provide a very significant boost to domestic demand. Coming on top to the indirect taxes are the concessions and relief announced as part of the Union Budget. Taking a multiplier effect, these will quite definitely boost the GDP numbers," he said. The total impact of the multiplier effect due to direct tax relief (income tax cuts) and indirect tax relief (GST rate cuts) on the economy will be more than Rs 2.5 lakh crore, though some other uncertainties may dilute the effect, he added.