Union Budget 2025: AMFI has urged the Finance Minister to strengthen investors’ confidence in mutual funds, increase their participation and address tax-related concerns.
Union Budget 2025: Investors’ attraction towards investing in mutual funds in the country has increased in recent years. However, the number of active investors in mutual funds is still not even 10 crores compared to the country’s population of 140 crores. In such a situation, to attract more and more investors to invest in mutual funds, the Association of Mutual Funds has submitted a list of its demands on behalf of the industry to Finance Minister Nirmala Sitharaman regarding the budget to be presented on February 1, 2025.
Wealth creation gets a boost for investors
AMFI (The Association of Mutual Funds) has urged the Finance Minister to strengthen investors’ trust in mutual funds, increase their participation and address tax-related concerns. AMFI CEO Venkat Chalasani said, we want to see a progressive budget that develops mutual funds as a strong pillar of wealth creation for investors along with the country’s economic development.
The increase in capital gains tax rates should be rolled back
AMFI has demanded a rollback of capital gains tax rates from the Finance Minister, which was increased by the Finance Minister while presenting the budget on 23 July 2024. In the last budget, the short term capital gains tax rate was increased to 20 percent and the long term capital gains tax to 12.5 percent, which AMFI has demanded to reduce to 15 percent and 10 percent. According to AMFI, retail investors shy away from investing in mutual funds due to high tax rates. The mutual fund organization has also demanded adjustment of long term capital gains tax on equity investments, in which 10 percent LTCG Tax has been demanded on investments of 1-3 years and exemption from LTCG Tax on investments of more than 3 years.
Permission to launch pension plan
The association of mutual funds has demanded the Finance Minister to allow mutual funds registered with SEBI to launch pension-oriented schemes under section 80CCD similar to NPS. These schemes can offer market-linked and flexible plans as an alternative to traditional pension plans, which will benefit those working in the unorganized sector. Also, giving tax incentives similar to NPS will increase investment for a longer period, which will reduce dependence on foreign portfolio investors (FPI).
Investment should be allowed under 54EC
The Association of Mutual Funds has also demanded the Finance Minister to allow mutual funds to invest in priority sectors like infrastructure so that they can qualify for capital gains tax exemption under section 54EC. According to AMFI, by doing this, the gains from property sales can be invested in the development of infrastructure projects. This will reduce the government’s borrowing burden and investors will get the option of getting market-linked returns instead of the existing low-return bonds.
Permission to introduce debt-linked saving schemes
Apart from this, AMFI has demanded a 10% flat surcharge on capital gains and dividends from mutual funds for debt NRIs. It has also demanded permission to invest in ELSS investments in multiples of Rs 500. AMFI has asked to start Debt-Linked Savings Schemes so that retail investors have a new investment option and India’s corporate bond market can be developed. AMFI said that exemption from deduction of higher TDS on PAN being inoperative will help in increasing the ease of doing business and will ease the problems of fund houses and investors.
