Saakaar

Value of your money due to inflation

*What are Debt funds?*
Debt funds are mutual fund schemes which invest in fixed income generating securities such as Commercial Papers (CP), Certificate of Deposit (CD), Corporate Bonds, T-Bills, government securities and other money market instruments. These instruments have a fixed maturity date and interest rate that the buyers could earn till the maturity of the security. They are considered to be less volatile than equity funds and are hence ideal for investors who are relatively risk averse and are looking for stability in their investments.
*Taxability of Debt Mutual Funds*
If the units of the scheme are held for less than 3 years, then any gains are calculated as STCG(Short Term Capital Gain) and are taxed as per an individual’s tax slab whereas if they are held for more than 3 years then the gains will be calculated as LTCG(Long Term Capital Gain) and will be taxed at 20% with the benefit of indexation.

It is better option against FD with more than 3 yrs of maturity.

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