The Second wave of Covid-19 has already shattered all of us and there are warnings about the third wave looming large. The speed with which the second wave spread has taken everyone by surprise and shock.
It has made all of us realise the importance and inadequacies of medical infrastructure in the country. This realisation will push the governments to make huge investments in healthcare sector in the years to come. The inadequacies of the available facilities is evident from the economic survey of 20-21 which mentioned that a total of 15,99,870 lives were lost due to poor quality of healthcare in the country. Ramping up of health infrastructure is not a short term task which can be completed in a few months. It will take years altogether for us to have a reputable level of infrastructure in place.
Moreover, healthcare is a sector which needs to constantly innovate to remain relevant. The innovations relate to the process of treatments as well the diagnostic and treatment methods used for treatment of the patient. The innovations need constant investment and spending.
This all points to importance of investing in healthcare sector.
Since health infrastructure comprises of various activities related with health service and as there are hundreds of companies engaged in providing these services, it is not possible for an average investor to identify and invest in companies which have potentials to perform better.
Exchange traded funds are generally the units of schemes which track a particular index fund but are traded on stock exchanges. So the ETFs are passive funds imitating an index. The days of actively schemes beating the benchmark consistently are over and therefore investors have started investing in passive funds. The same is evident from the fact that global AUM of ETF has gone up from 1313 Billion USD in 2010 to 7336 billion USD in 2020 representing CAGR of 18.77%.
ICICI prudential ETF is an equity oriented scheme so any capital gains made on transfer of these ETFs shall be taxed at concessional rates. Any gains made on transfer/sale of these ETFs within one year shall be taxed at 15% and shall also be eligible for rebate under Section 87A in case the total taxable income does not exceed five lakhs.
The profits made on selling of these ETFs after 12 months shall be taxed at flat rate of 20% after initial exemption of one lakh. The initial exemption of one lakh is available for the aggregate of profits made on all listed shares and equity oriented mutual funds schemes like this ETF taken together.