No Fault, No Punishment

(This column was first published on Value Research Online.)

“I shouldn’t be punished for this, it wasn’t my fault.”

My 4-year-old son has gotten quite used to saying this. It has become one of his pet dialogues, one that he uses every time he’s in a jam. Of course, since he’s a kid, he never believes that any wrong he does is his fault. His little mind is still to accurately process what’s wrong and what’s right in most cases. This is why he feels he shouldn’t be punished for snatching a toy away from one of his friends or getting angry if every one of his demands isn’t fulfilled. I can’t really argue with him much on this, because nothing can stand against his ‘I’m just a kid’ excuse.

But as far as getting punished without any fault of theirs is concerned, we adults are more genuine victims of it than our kids. There are a large number of people who get caught in legal tangles without any wrongdoing on their part, simply because they end up being at the wrong place at the wrong time. This happens on a smaller scale as well. Take for example your wife’s desire to go shopping on a holiday, where you end up getting punished by way of standing outside a trial room holding her bag.

Jokes apart, another more severe punishment without any fault happened when a mutual fund scheme you’ve invested in was merged with another scheme. This merger was treated as redemption and a fresh investment for every investor, which resulted in tax instances. The decision of the merger wasn’t yours, but the mutual fund company’s conclusion to do so would end up in you paying taxes if applicable. Thankfully, this year’s Union Budget has amended this rule. From now on, investors will face no tax liability when mutual fund schemes are merged.

The budget didn’t have a lot on the personal finances front, but this was a significant takeaway nonetheless. At a time when new schemes are launched frequently, and SEBI has barred fund companies from launching schemes that are similar to what they already have, fund mergers have become frequent as well, the decision to do which is not in the investors’ hands anyway. So it makes sense that investors don’t have to pay taxes in such cases.

After all, at times even we adults need to hear, “Okay, fine!” when we say, “I shouldn’t be punished for this, it wasn’t my fault.”

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