Despite the slump in India’s gross domestic product (GDP) growth rate, Foreign Portfolio Investors (FPIs) have continued to invest in India. Since the time the finance ministry took a number of measures to provide an impetus to the economy’s growth rate, they have engaged in spirited buying. But retail investors need to bear in mind that a strategy that works for FPIs may not be suitable for them.

Reforms such as the Goods & Services Tax (GST), Bankruptcy Code, Digital India, Start-up India, Make in India, skill development, affordable housing, and steps like a timely boost to the realty sector, emphasis on better infrastructure (Bharatmala Pariyojana), bank recapitalisation, measures taken to boost consumption, to name a few, have been viewed positively by FPIs.

In addition, the Reserve Bank of India (RBI) has remained accommodative in its monetary policy action and

Investors pumped Rs 1.2 trillion into various mutual fund schemes in January, after pulling out a massive Rs 62,000 crore in the preceding month, primarily on account of infusion in liquid and overnight schemes.

Mutual fund inflows will gather further momentum in the coming months, Union Asset Management Company CEO G Pradeepkumar said.

According to data by the Association of Mutual Funds in India (Amfi), net inflow of Rs 1.2 trillion was witnessed in mutual fund schemes last month as compared to an outflow of Rs 61,810 crore in December.

Fund managers attributed the growth in asset base to strong inflow of around Rs 1.09 trillion in debt-oriented schemes.

Among debt-oriented schemes, liquid funds, with investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon, received flows worth about Rs

One of the major changes proposed by finance minister Nirmala Sitharaman in her second Union Budget relates to the taxation of dividends. The Budget has proposed to abolish the Dividend Distribution Tax (DDT), and moving to the classical system of taxing dividend in the hands of individuals.

Current situation: Currently, a domestic company is required to pay DDT at the rate of 15 per cent (plus applicable surcharge and health and education cess) on the dividends. Further, dividend income from a domestic company is tax-free up to Rs 10 lakh. Dividend in excess of Rs 10 lakh is taxed at the rate of 10 per cent in the hands of specified resident individual shareholders. It is also tax-free for non-resident individual shareholders.

Similarly, mutual funds are also liable to pay tax at the specified rate on the income distributed to unit