Previously, the goal is to earn a steady income of equity securities of persons to be used in preference to invest in long-term deposits (near future), without taking into account the tax effect. Now they have to obtain a higher return to cover inflation on the rise, protect capital and to ensure tax efficiency has led to new investment locations.
Among other things, the avenue that offers similar benefits to food and beverages with added tax efficiency are fixed maturity plans (FMP), which are funds with a fixed deposit investment in a portfolio's underlying debt market instruments, government and money. The nature of the underlying assets are to provide current income with capital protection. PGF expected returns have the same characteristics as other obligations, but are subject to less volatility due to market fluctuations, and are not as affected by rising interest rates and credit risk and liquidity risk. PGF are offered by various mutual fund houses that are generally listed and provide liquidity to investors. However, PGF still have some disadvantages compared to the DFI, which have no predetermined interest rate, unsecured deposits of premature maturity expensive, and investing these funds in corporate bonds is likely rather than government securities.
Another important factor that should be taken into consideration when selecting an investment avenue has tax implications for investment and the subsequent realization of gains. For taxation, FMPs are investment income and gains from taxable capital gain, either short or long term, which is based on the mode.
Investments, with a waiting time is less than a year, the profits (short term) are aggregated with other sources of income and taxed at progressive tax rates to. However, in order to maximize efficiency (effective tax planning), people can choose the FMPs dividend payout dividend by an investor would have received tax-exempt fund, and the house would suffer from the dividend distribution tax (DDT) is 16.995%. If the investment period that they have more than one year (long term), or 10% rate would be (without indexation) or 20% (and indexing) is achieved.
In comparison, the interest in the near future, derived from ordinary income are taxed on the basis of the progressive tax rate (from 10% to 30%). However, only silver lining to invest in the near future, the tax benefits of § s 80C of the Income Tax Act and the basic bet (up to R 1 lakh given to all other eligible investments), for a term of five years and meets other conditions as per law. Since the objective of equity security, regular income with minimum risk, the investor can invest in FMPs find, offering more after-tax returns, investing in the near future.
Source: [financial express]
Among other things, the avenue that offers similar benefits to food and beverages with added tax efficiency are fixed maturity plans (FMP), which are funds with a fixed deposit investment in a portfolio's underlying debt market instruments, government and money. The nature of the underlying assets are to provide current income with capital protection. PGF expected returns have the same characteristics as other obligations, but are subject to less volatility due to market fluctuations, and are not as affected by rising interest rates and credit risk and liquidity risk. PGF are offered by various mutual fund houses that are generally listed and provide liquidity to investors. However, PGF still have some disadvantages compared to the DFI, which have no predetermined interest rate, unsecured deposits of premature maturity expensive, and investing these funds in corporate bonds is likely rather than government securities.
Another important factor that should be taken into consideration when selecting an investment avenue has tax implications for investment and the subsequent realization of gains. For taxation, FMPs are investment income and gains from taxable capital gain, either short or long term, which is based on the mode.
Investments, with a waiting time is less than a year, the profits (short term) are aggregated with other sources of income and taxed at progressive tax rates to. However, in order to maximize efficiency (effective tax planning), people can choose the FMPs dividend payout dividend by an investor would have received tax-exempt fund, and the house would suffer from the dividend distribution tax (DDT) is 16.995%. If the investment period that they have more than one year (long term), or 10% rate would be (without indexation) or 20% (and indexing) is achieved.
In comparison, the interest in the near future, derived from ordinary income are taxed on the basis of the progressive tax rate (from 10% to 30%). However, only silver lining to invest in the near future, the tax benefits of § s 80C of the Income Tax Act and the basic bet (up to R 1 lakh given to all other eligible investments), for a term of five years and meets other conditions as per law. Since the objective of equity security, regular income with minimum risk, the investor can invest in FMPs find, offering more after-tax returns, investing in the near future.
Source: [financial express]
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