The recent change in taxation for debt mutual funds and other categories of funds, making them lose their long-term capital gain status and taxed like FDs, has raised questions on whether it's better to prefer fixed deposits over debt funds. However, there are some things to keep in mind.

💎 First, the interest on FDs is taxed every year, while with mutual funds, it is only taxed at the point of redemption. This means there is more cash outflow on tax for FDs than mutual funds.

💎 Second, in FDs, there is no loss, so there is no question of set-off. Still, in mutual funds, if there is a loss, it can be set off against any short-term capital gain, making it tax-efficient.

💎 Third, FD interest is not tax-efficient compared to a systematic withdrawal plan in debt mutual funds. This is because, with the withdrawal plan, only the capital gain portion of the redemption amount is taxed.

Therefore, tax alone should not be the only consideration for deciding whether to switch to FDs, but rather attractive interest rates and the absence of other instruments that can set off losses.

Tools and Recommendations mentioned in the video :
🔸 Prime Deposits - [ Ссылка ]
🔸 FD Tool - [ Ссылка ]
🔸 Debt Fund Recommendations - [ Ссылка ]

Chapters :
0:00 - Introduction
0:50 - Taxation
1:48 - Set-off benefit
3:02 - FDs 🆚 SWP
5:45 - Interest Rates

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