Mutual Fund Industry Seeks Restoration of Indexation Benefit for Debt Funds in Budget FY26

The mutual fund industry in India has requested the restoration of indexation benefits for debt funds in the Union Budget for FY26. The demand stems from concerns that the removal of indexation benefits for long-term capital gains on debt funds in 2020 has negatively impacted investor interest. Indexation allows investors to adjust the cost of their investments according to inflation, which reduces their taxable gains and benefits long-term investors. The industry believes restoring this benefit will encourage more investment in debt funds and help stabilize the market, particularly during uncertain economic times. The restoration of indexation is viewed as a vital step to boost investor confidence and market growth.