New Delhi: Union Minister Nirmala Sitharaman is all set to present the Union Budget 2026 on February 1 Sunday. According to the reports AMFI the association of mutual fund companies has sent its recommendations to the Ministry of Finance. AMFI is reportedly focusing on increasing the savings for middle-class families providing tax relief and encouraging retail investors to opt for long-term investments.

It is important to note that if the Modi government accepts the proposals from AMFI it will have a direct positive impact on your finances. Here are the major demands of AMFI:

1. Restoration of Indexation benefit on debt funds: The AMFI has demanded the return of the indexation benefit (tax relief adjusted for inflation) on debt mutual funds held for more than three years. Notably the investments in debt funds have declined since the removal of indexation.

2. New tax-saving scheme: DLSS (Debt-Linked Savings Scheme)

The association has requested the government to launch an entirely new scheme called DLSS. According to AMFI this would have a lock-in period of five years. AMFI has also demanded a separate tax deduction for investments in this scheme in addition to Section 80C. About 80 percent of the funds would be invested in high-quality debt instruments.

3. ELSS and the New Tax Regime: AMFI has proposed that investments in ELSS (Equity Linked Savings Scheme) should also be allowed a separate tax deduction under the new tax regime. It has also demanded the removal of the condition that investments must be made in multiples of Rs 500.

4. Relief in Long-Term Capital Gains (LTCG): It is important to note that at present the annual income of up to Rs 1.25 lakh from equity (stock market) investments is tax-free. AMFI believes this limit is too low and should be increased.

5. Tax parity for Fund-of-Funds: Currently fund-of-funds that invest 90 percent of their money in equity are still taxed like debt funds. AMFI has demanded that such funds be treated as ‘equity funds’ and taxed at a lower rate accordingly.

6. Mutual funds for retirement (Retirement Solutions): AMFI has suggested that all mutual funds should be allowed to launch ‘pension-oriented retirement schemes’. These schemes should receive tax benefits similar to those offered under the NPS (National Pension System).