India is investing more in mutual fund SIPs, and paying more tax too

It appears to be the dream economic scenario for rising financial powerhous India: the country’s citizens are investing more and paying more taxes, too.

Latest data shows some big milestones.

New records for SIPs

In October 2024, investments through monthly systematic investment plans (SIPs) into mutual funds surpassed Rs 25,000 crore for the first time and reached an all-time high of Rs 25,322.74 crore in October, according to data from the Association of Mutual Funds of India (AMFI).

The number of active SIP accounts also hit a record high of 10.12 crore in October, compared to 9.87 crore the previous month.

The robust growth included the addition of 24.19 lakh net new accounts in October alone, while new registrations stood at 63.69 lakh.

These milestones clearly show that there is increased participation in stock markets, even as broader markets reflect bearish trends.

But that’s not all.

Tax collection increases

Simultaneously, India’s direct tax revenue collection surged, with net collections reaching Rs 12.1 lakh crore between April 1 and November 10, marking a 15.4 per cent increase over the previous year, according to the Income Tax Department.

Gross collections, including corporate and personal taxes, climbed by over 21 per cent to Rs 15 lakh crore during the same period.

The department also issued tax refunds totaling Rs 2.9 lakh crore, contributing to higher disposable income and spending capacity.

The growth in direct tax collection supports the government’s fiscal deficit target of 4.9 per cent for the financial year ending March 2025, as set in the July budget.

Strong tax receipts help reduce reliance on borrowing, stabilising India’s fiscal position.

In a nutshell

Together, these indicators of rising retail investment and increasing tax revenue paint a picture of a maturing Indian economy.

With individual wealth creation through investments aligning with strengthened government revenues, India appears resilient in the face of global uncertainties.

The shift shows a growing preference for long-term financial strategies among Indian citizens and a broader economic base poised to support sustainable growth in the years ahead.