AMFI Proposes Mutual Fund Linked Retirement Schemes with Exemption Tax Treatment

India’s mutual fund industry body, AMFI, has proposed a new retirement product framework called Mutual Fund Linked Retirement Schemes (MFLRS) as part of its pre‑Budget recommendations. The proposal seeks EEE (Exempt‑Exempt‑Exempt) tax treatment for these schemes, aligned with the National Pension System (NPS) approach under relevant provisions such as Section 80CCD.

AMFI’s submission positions the product as a dedicated, retirement‑linked, tax‑incentivised mutual fund vehicle, addressing what it describes as a current gap versus NPS and EPF. The recommendation also includes defined retirement‑oriented rules around vesting and withdrawals, designed specifically for long‑term retirement savings structures.

AMFI’s Key Recommendation: Launch Of MFLRS

AMFI’s central recommendation is to allow SEBI‑registered mutual funds to launch pension‑oriented mutual fund schemes under the proposed MFLRS framework. The industry body has described MFLRS as a retirement‑linked product that could be offered broadly by mutual funds, similar in concept to existing retirement products but with clearer tax alignment.

This proposal has been included in AMFI’s wider set of Budget recommendations focused on long‑term savings and retirement‑oriented investing. AMFI has also referenced the principle of similar tax treatment for similar retirement products while presenting the MFLRS concept.

Proposed EEE Tax Treatment and Section 80CCD-Style Deductions

AMFI has proposed EEE tax status for MFLRS, a structure in which contributions, accruals, and eligible withdrawals are treated as exempt under the specified framework. The recommendations include bringing MFLRS under a new or parallel provision aligned with Section 80CCD, which currently governs pension‑linked deductions for NPS.

AMFI has also sought separate deductions for employee and employer contributions, mirroring the employer‑linked retirement contribution structure used in pension products. In addition, AMFI has called for clearer operational rules and guidelines so the retirement‑linked nature of the product is reinforced through defined participation and withdrawal design.

Tax Incentivised Retirement Saving

AMFI has highlighted that mutual funds currently lack a dedicated, retirement‑linked tax‑incentivised vehicle comparable to NPS or EPF. In prior Budget representations, AMFI has noted that while NPS is eligible for Section 80CCD benefits, only a limited set of notified mutual fund pension schemes receive tax treatment through Section 80C, and the process can be scheme‑specific.

This difference is one reason AMFI has sought a clearer framework that treats retirement‑oriented mutual fund products on a comparable footing with pension products already in the tax code. Coverage of AMFI’s Budget recommendations has also linked the proposal to broader goals of strengthening long‑term household savings participation through formal channels.

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Conclusion

AMFI has proposed the launch of Mutual Fund Linked Retirement Schemes (MFLRS) as a dedicated retirement‑linked mutual fund product category. The proposal seeks EEE tax treatment and separate deductions for employee and employer contributions, aligned with an NPS‑style framework such as Section 80CCD.

It also calls for defined vesting and withdrawal rules tailored to retirement use, positioning the product as a structured long‑term savings option within the mutual fund ecosystem. The recommendation forms part of AMFI’s broader set of pre‑Budget measures aimed at long‑term savings, tax alignment, and retirement‑oriented investing.

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