As part of the video series on the impact of the tax on mutual fund investments, this video discusses the impact of tax on fixed maturity plans (FMP), offered by mutual funds
Edited Highlights
0:33 How are fixed maturity plans or FMPs, offered by mutual funds, taxed?
2:34 FMPs are type of debt funds and thus, their taxation is the same as that of other debt funds
2:48 FMPs typically invest in debt securities and these investments are held till maturity
3:00 This lends relative stability to their returns
3:08 If you stay invested in an FMP for less than 3 years, your capital gains get added to your income and you get taxed according to your tax slab
3:21 If it is more than 3 years, you pay long term capital gains tax at a concessional rate of 20%
3:32 The capital gains also gets adjusted according to inflation
3:38 Cost of acquiring the units gets enhanced by the inflation index
3:42 As a result, capital gains for tax purposes gets reduced
3:53 At the highest tax slab of 30%, you get the twin advantage of a lower tax rate and inflation indexation of the cost of investment
