Tax concessions in debt mutual funds and tax parity between gold and gold ETF MF schemes are among the key demands from the mutual fund industry lobby ahead of this year's annual budget.
The Association of Mutual Funds of India has also sought to expand the ambit of equity funds to include fund-of-funds. It has sought simpler taxation provisions for offshore funds managed by Indian portfolio managers.
Finance Minister Nirmala Sitharaman will be presenting the budget on July 23. The Budget for 2024–25 will be the first major economic document of the Modi 3.0 government and is expected to lay the road map for making India a developed nation by 2047.
An interim budget had been presented in February, preceding the Lok Sabha elections.
Here's a look at their key demands:
Tax Concessions In Debt Mutual Funds
The AMFI has requested that units of debt mutual funds held for more than three years be taxed at a rate of 10% without indexation, similar to the tax on long-term capital gains from debentures.
It has been proposed that mutual fund units be classified as "securities" and that the LTCG tax on them be aligned with those applicable to bonds, debentures, state development loans and government securities.
The corporate debt market development fund should have a tax regime similar to that of mutual funds, the AMFI said.
Mutual Fund-Linked Retirement Schemes
AMFI has suggested that mutual funds registered with the market regulator should be permitted to introduce retirement schemes called "Mutual Fund-Linked Retirement Schemes" and have tax benefits similar to those of the National Pension System. Contributions made by employers and employees should be considered for calculating tax benefits where matching contributions are involved, AMFI said.
Changes In Tax For MF Schemes And ETFs
The AMFI has also suggested a change in the tax treatment for MFs and ETFs that primarily invest in commodities like gold, silver or gold funds that allocate at least 90% of their investments into units of gold ETFs to simplify the tax treatment for investments in such schemes.
Mutual fund units that invest in specific infrastructure sub-sectors designated by the Government of India, the proposal said, should be included in the category of specified long-term assets eligible for tax exemption on long-term capital gains under Section 54EC of the Income Tax Act.
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