AMFI Advocates for Tax Benefits in Upcoming Budget

The Association of Mutual Funds in India is urging the government to restore indexation benefits for debt funds and allow tax benefits for mutual fund pension schemes similar to the National Pension System. They also recommend increasing the LTCG tax-free limit on equity investments in the FY 2026-27 budget.

The Association of Mutual Funds in India (AMFI) has called on the government to restore indexation benefits for debt funds and to permit mutual funds to offer tax-advantaged pension schemes akin to the National Pension System in the upcoming 2026-27 Budget.

Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget on February 1 in the Lok Sabha. In proposals submitted for the FY 2026-27 budget, AMFI advocated for an increased tax-free exemption limit on long-term capital gains from equity investments to bring more relief to retail and long-term investors.

Among its suggestions, the industry body proposed raising the tax-free limit on equity long-term capital gains from Rs 1.25 lakh to Rs 2 lakh. AMFI also recommended reinstating the long-term indexation benefits for debt schemes withdrawn in Budget 2024 to encourage long-horizon fixed income savings and channel household savings to the corporate bond market. The body further suggested the creation of a 'Debt Linked Savings Scheme' to spur retail investment in debt instruments and urged an amendment to redefine equity-oriented funds.

(With inputs from agencies.)