The Association of Mutual Funds (AMFI) has released a document with 13 proposals from the mutual fund industry to the finance ministry for the upcoming Union Budget 2025.

“We anticipate a Union Budget that prioritizes investor confidence and deepens participation in mutual funds by addressing key tax-related concerns. We look forward to a progressive budget that reinforces mutual funds as a pillar of economic development and investor wealth creation,” Venkat Chalasani, Chief Executive, AMFI said.

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The key suggestions given by the AMFI include reinstating indexation benefits for long-term capital gains on debt mutual funds withdrawn in Budget 2024.

It also seeks roll back of the increased tax rates on short-term and long-term capital gains to their previous levels of 15 percent and 10 percent, respectively.

AMFI further bets on a proposal to include Fund of Funds (FoFs) that invest at least 90 percent in equity-oriented funds under the equity-oriented category.

AMFI recommended that SEBI-registered mutual funds be allowed to launch pension-oriented schemes (MFLRS) with tax benefits similar to NPS under Section 80CCD.

It proposed allowing mutual funds investing in priority sectors like infrastructure to qualify as specified assets under Section 54EC for capital gains tax exemptions.

Easing conditions under Section 9A to attract offshore funds managed by Indian portfolio managers, especially in International Financial Services Centres (IFSCs), AMFI proposed.

A flat surcharge rate of 10% on TDS for dividends and capital gains on mutual fund units for NRIs. It also urged removing the restriction requiring ELSS investments to be made in multiples of Rs 500.

“Raising the threshold for withholding tax on income distribution by mutual funds from Rs 5,000 to Rs 50,000 per annum will reduce compliance hassles for both investors and fundhouses,” it said in its document.

AMFI recommends applying differentiated LTCG tax rates for equity investments – 10% for holdings of 1–3 years and exempt gains beyond 3 years.

A DLSS will provide a safer, fixed-income investment option for retail investors while developing India’s corporate bond market.

It also proposed to ease TDS compliance for PAN issues as it said by exempting mutual funds from deducting higher TDS rates when an investor’s PAN becomes inoperative after on boarding will enhance ease of doing business.