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Bank FD


 

Suppose A H.N.I. Investor Decides To Invest Rs. 1 Crore In Bank F.D. at Interest Rate of 9.5% Per Annum for 1095 days (more than 1 year)

Principal Amount for 1st Year:: Rs. 1,00,00,000

Interest Earned In 1st Year  :: Rs. 9,50,000/-

Less TAX @ 30% slab :: Rs. 2,85,000/- 

Balance For 1st Year :: Rs. 6,65,000/-

 

Principal Amount for 2nd Year::  Rs. 1,06,65,000 (assuming interst earned is not withdrawn)

Interest Earned In 2nd Year  :: Rs.10,13,175/-

Less TAX @ 30% slab :: Rs. 30,38,953/-

Balance For 2nd Year :: Rs. 7,09,222/-

 

Principal Amount for 3rd Year::  Rs. 1,13,74,222 (assuming interst earned is not withdrawn)

Interest Earned In 3rd Year  :: Rs.10,80,551/-

Less TAX @ 30% slab :: Rs. 3,24,165/-

Balance For 3rd Year :: Rs. 7,56,386/-

 

In three years 1 crore became 1,21,30,608/- POST TAXES on maturity + No tax benefits on ENTRY.


Now Suppose A H.N.I. Investor Decides To Invest Rs. 1 Crore In DEBT MUTUAL FUND SCHEME at Interest Rate of 9.5% Per Annum for 1095 days (more than 1 year)

Principal Amount for 1st Year:: Rs. 1,00,00,000

Interest Earned In 1st Year  :: Rs. 9,50,000/-

Less TAX @ 20% with INDEXATION clause:: Rs. 30,000/- 

Balance For 1st Year :: Rs. 9,20,000/-

 

Principal Amount for 2nd Year::  Rs. 1,09,20,000 (assuming interst earned is not withdrawn)

Interest Earned In 2nd Year  :: Rs.10,37,400/-

Less TAX @ 20% with INDEXATION clause:: Rs. 32,760/-

Balance For 2nd Year :: Rs.10,04,640/-

 

Principal Amount for 3rd Year::  Rs. 1,19,24,640 (assuming interst earned is not withdrawn)

Interest Earned In 3rd Year  :: Rs.10,80,551/-

Less TAX @ 20% with INDEXATION clause:: Rs. 35,773/-

Balance For 3rd Year :: Rs. 10,44,788/-

In three years 1 crore became 1,29,69,428/- POST TAXES on maturity + TAX benefits on ENTRY.


So, Its CLEAR that with investing in DEBT-MUTUAL FUND, Investor has avoided any RISK and also earned interest equivalent to bank-FD scheme, but with debt mutual fund investor saved big on TAXES which inturn increased its returns.

Mutual Fund Investor earned Rs. 8,38,820/- MORE on his/her investment against bank-FD.

Bank FD