In case of capital gain, it is treated as short term if the investments are held for less than 3 years and rest is long term. Unlike all other debt funds, FMP are also taxed on the basis of time horizon of the holding. Although the FMP have similar tax rates with other debt instruments like gilt funds, short term debt funds but they are capable of generating more returns than the others. Elearnmarkets ELM is a complete financial market portal where the market experts have taken the onus to spread financial education.
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Courses Webinars Go To Site. Home Basic Finance. December 1, Reading Time: 6 mins read. Thus for each of them we have a solution called Fixed Maturity Plan. What is Fixed Maturity Plans? Tags: basic english fixed deposit fixed maturity plan investment planning mutual fund. Share 6 Tweet Send. Previous Post Technical Indicator that reflect Volatility in the Market Next Post Nifty closed on a weaker note and failed to sustain above level.
Elearnmarkets Elearnmarkets ELM is a complete financial market portal where the market experts have taken the onus to spread financial education. Related Posts. Capital Markets. Basic Finance. June 14, Comments 2 Michael Dunkley says:. Amazing Post. Thanks for sharing this amazing post. Sakshi Agarwal says:. Hi Michael, Thank you for reading! Tax implications- If you remain invested in the FMP having tenure of 36 months and above, you can enjoy the long term capital gain LTCG benefit along with indexation benefit wherein you pay tax only on inflation-adjusted capital gains.
This may be beneficial and help you save considerable tax. Liquidity Risk- FMPs are close-ended in nature, and any future trade can happen only on the exchange where they are listed. However, trading in the units of FMPs is negligible, making them practically illiquid. As an investor, you should ensure your investment horizon aligns with the tenure of FMP since, in the later stages, the only way you can opt-out of an FMP is to find a buyer for the units you are holding.
FMPs can be a useful tool for investors looking to lockin their investments for a specified period to achieve their various short-term or long-term goals in line with the maturity profile of the invested FMP and are looking for some predictability in the returns.
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