2 Replies to “What are the benefits of investing in FMP(Fixed Mutual Plan) in India?”

  1. Fixed maturity plans (FMPs) were an innovation designed mainly to give investors a fairly certain rate of return in the backdrop of interest rate instability. FMPs are close-ended debt funds (investments can be made only during the new fund offer period) with a fixed maturity horizon (i.e. the investment maturity, which is fixed, is declared at the outset). They invest across debt instruments to arrive at a pre-determined yield. The pre-determined yield is the indicative yield that FMPs usually declare before hand at the time of new fund offer period (NFO). This way, investors are aware as to how much return their investment will deliver on maturity

    Returns on FMPs are treated as Capital Gains and taxed accordingly.
    Tax rate on LTCG is 10% without indexation benefit & 20% with indexation benefit

  2. FMP or Fixed Maturity Plan is closed ended mutual fund with the following features.

    1.It is a fixed tenure fund.

    2. It is a debt fund.

    3. Generates income while protecting the capital by investing in money market instruements and debt instruments.

    4.Tenure ranges from one month to 5 years.

    5.It invest in debt instruments which has maturity linked to the fund’s tenure.

    6.Not sensitive to interest rate volatility when held till maturity.

    7. Lower Tax rate than banke fixed deposits.For bank FD, the income tax slab rate is applied.

    Who can invest in FMP?

    If you are not a risk-free investor and look for an assured income, this is the right option for you.

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