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Union Budget 2025: The attraction of investors towards investing in mutual funds in the country has increased in recent years. However, against the country’s population of 140 crore, the number of active investors in mutual funds is still not even 10 crore. In such a situation, in order to attract more and more investors to invest in mutual funds, the Association of Mutual Funds has submitted its list of 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 requested the Finance Minister to strengthen the confidence of investors in mutual funds, increase their participation and remove 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 economic development of the country.
The increase in capital gains tax rates should be withdrawn
AMFI has demanded rollback of the capital gains tax rates which were increased by the Finance Minister while presenting the budget on 23 July 2024. In the last budget, short term capital gains tax rate was increased to 20 percent and long term capital gains tax was increased 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 body has also sought adjustment of long term capital gains tax on equity investments, including 10 per cent LTCG tax on investments held for 1-3 years and exemption from LTCG tax on investments held for more than 3 years. Has been.
Permission to launch pension plan
The organization of mutual funds has demanded from 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 maximum long term which will reduce dependence on Foreign Portfolio Investors (FPIs).
Permission to invest under 54EC
The Association of Mutual Funds has also demanded from 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 profit from property sales can be invested in the development of infrastructure projects. This will reduce the government’s borrowing burden and provide investors with the option of earning market-linked returns instead of the current low-yielding bonds.
Permission to launch debt-linked savings schemes
Apart from this, AMFI has demanded to impose 10 percent flat surcharge on capital gains and dividends from mutual funds for debt NRIs. Also, there is a demand to allow ELSS investment in multiples of Rs 500. AMFI has asked to start Debt-Linked Savings Schemes so that retail investors can have a new investment option and India’s corporate bond market can be developed. Amfi’s exemption from deducting higher TDS in case of PAN being inoperative will help in increasing the ease of doing business and will ease the problems of fund houses and investors.
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