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In today's competitive world, every rupee saved can bring you fortune. And if your income is tax exempt, you have all the reason to be delighted. With the security of a cash fund, liquidity of a bank account, return higher than the inflation rate and income exempt from tax, BCSF
(BMA Chundrigar Road Savings Fund)
can be the ultimate choice to mobilize your savings. The impact of 10% withholding tax on your investment over a term of five years assuming 10% return on investment is shown below:
It's not only the capital gain on mutual fund that is exempt from tax but also the year end dividend if given in the form of bonus units. In addition, individuals can also claim tax rebate on investment of Rs.200,000 or 10% of their annual taxable income (whichever is lower). This tax exemption results in higher yield and makes mutual funds more competitive than other investment options.
Assuming an investment of Rs.500,000 held for one year in the fund with return rate of 10% by the investor having taxable income of Rs.2,000,000 per year and falls in 20% tax slab. He claims the tax rebate on his investment which increases his overall return by 8% (taking total return to 18%) as shown in the chart: