If on the other hand, you hold your funds for more than three years, the gains in them are taxed as long term capital gains at a rate of 20% (lower than the highest 30% tax slab). You also get the benefit of indexation which dramatically cuts the effective tax rate on them.
Let's understand this looking at the computation of tax on an equal amount of income from each savings instrument (though of course debt funds yield much higher returns).
As the table shows, you pay as much as 27,000 rupees of tax on savings bank interest of 1 lakh and as much as 30,000 on FD income of 1 lakh. In comparison you pay just Rs4,153 for debt fund income above 1 lakh when it is held for more than 3 years. Also, in comparison to FDs, you do not have Tax Deducted at Source (TDS) cut from your gains from debt funds.
You may be puzzled by the fact that in this illustration, short term funds seem to carry a higher tax than savings bank accounts if held for less than 3 years.
This is due to the Rs10,000 exemption on savings bank interest. However if you make more money in savings interest than that, the tax rate is the same. Nor can savings bank interest be set off against short term losses in the way that short term funds' gains can.
Top 10 Tax Saver Mutual Funds for 2018
Best 10 ELSS Mutual Funds to invest in India for 2018
1. DSP BlackRock Tax Saver Fund
2. Invesco India Tax Plan
3. Tata India Tax Savings Fund
4. ICICI Prudential Long Term Equity Fund
5. Birla Sun Life Tax Relief 96
6. Franklin India TaxShield
7. Reliance Tax Saver (ELSS) Fund
8. BNP Paribas Long Term Equity Fund
9. Axis Tax Saver Fund
10. Birla Sun Life Tax Plan
Invest in Best Performing 2018 Tax Saver Mutual Funds Online
Invest Best Tax Saver Mutual Funds Online
Download Top Tax Saver Mutual Funds Application Forms
For further information contact SaveTaxGetRich on 94 8300 8300
------------------------------
Leave your comment with mail ID and we will answer them
OR
You can write to us at
Invest [at] SaveTaxGetRich [dot] Com
OR
Call us on 94 8300 8300