Union Budget 2025 | Want restoration of tax benefits for debt funds: Achin Goel, Vice President at Bonanza

'The removal of long-term indexation benefits in budget 2024 has significantly impacted debt fund investors, leading to a decline in participation,' he said.

The Union Budget for the upcoming financial year is all set to be presented on February 1, 2025, by Finance Minister Nirmala Sitharaman. According to reports, the Narendra Modi government may consider slashing income tax for individuals earning up to Rs 15 lakhs per annum and extend the tax relief bracket in a bid to provide relief to the middle class and boost consumption.

Ahead of the Budget, Achin Goel, Vice President at Bonanza said "the stock market and investors are keenly anticipating measures that will bolster economic growth and enhance investment opportunities."

He added, "AMFI has released a 15-point proposal for the Budget to be presented by Finance Minister Mrs. Nirmala Sitharaman. One of the primary expectations from the mutual fund industry is the restoration of tax benefits for debt funds," saying, "The removal of long-term indexation benefits in budget 2024 has significantly impacted debt fund investors, leading to a decline in participation. Industry leaders argue that reintroducing indexation would help neutralize inflation's impact on capital gains, making debt investments more attractive again. Also, there is a demand for rollback of recent capital gains tax hikes, which deterred retail investors from engaging with mutual funds."

Goel further said, "We are also expecting revisions in income tax slabs or increase in deduction. Any tax relief will increase disposable income, particularly for middle-income group and stimulate consumer spending and led to economic recovery. A potential increase in the tax deduction limit under Section 80D for health insurance premium is another area where we are expecting some relief. Expectation for raising tax deduction limits under 80D to Rs.50,000 (Rs.1,00,000 for Seniors) from Rs.25,000 (Rs.50,000 for Seniors) and include section 80D in the new tax regime to promote insurance penetration and will be positive for health insurance companies like Star Health. Expectation is also for increasing the limit under section 24(b) to Rs.2-3 lacs from Rs.1.5 lacs to promote home buying and boost the real estate sector."

He also laid down expectations in terms of "strong government capital expenditure in the upcoming budget, especially in roads, railways and urban projects, which is likely to drive economic growth and create investment opportunities across sectors. This focus aligns with the broader vision of achieving a 'Viksit Bharat' by 2047. Electric Vehicles industry is anticipating incentives aimed at boosting domestic manufacturing and infrastructure development, including charging stations."

Goel continued, "Investors are also keenly aware of global economic trends and their potential impacts on domestic markets. With expectations of lower GDP growth, investors are looking for budgetary measures which will shape India's economic landscape in 2025. Institutional investors normally prioritize a stable regulatory environment that fosters long-term investment strategies. They expect clear guidelines regarding taxation policies and compliance requirements in the budget, which can significantly influence their investment decisions. Institutional investors also monitor macroeconomic indicators and expect the budget to reflect a sustainable economic growth. They are likely looking for measures that enhance GDP growth forecasts, control inflation and stabilize currency rates."

Union Budget 2025 | Nirmala Sitharaman, who continues to be Finance Minister, will present her record 8th Union Budget this time. While inflation has burnt a hole in the pockets of 'aam janata', reports suggest there might be a tax relief for those making up to Rs 15 lakh per year. Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.