@sajjad ali Thank you for your post!
The option "Delete backup data" will delete the backed up data from the vault if soft delete is not enabled. If soft delete is enabled and you proceed with "Delete backup data" it will delete the data after 14 days. More details are covered here - https://learn.microsoft.com/en-us/azure/backup/soft-delete-virtual-machines#soft-delete-for-vms-using-azure-portal
Now that your requirement is to stop VM backup and retain data for 1 year, you can stop protection for the VM in question and retain data as long as you want it to be in Azure. Here is the guidance for - Stop protection and retain backup data
Hope this clarifies!
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