Investors' attraction towards investing in mutual funds in the country has increased in recent years. However, still the number of active investors in mutual funds is not even 10 crores as 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 to Finance minister Nirmala Sitharaman on behalf of the industry regarding the budget to be presented on february 1, 2025.
Wealth creation should be encouraged for investors
AMFI (The Association of Mutual Funds) has requested the Finance minister to strengthen the confidence of investors in mutual funds as well as 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 growth.
Increase in capital gains tax rates should be withdrawn
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 association has also demanded adjustment of long term capital gain tax on equity investment, in which 10 percent LTCG tax has been demanded on investment of 1-3 years and exemption from LTCG tax on investment of more than 3 years.
Permission to launch pension plan
The mutual fund association 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).
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