BHARAT Bond FOF - April 2023 - Regular Plan

Suitability:

Medium Duration debt funds invest in bonds maturing in 3 to 4 years' time. They aim to earn slightly better returns than inflation and bank fixed deposits of a similar duration. The risk of incurring a loss in these funds over the said time frame is low, but they do not guarantee returns or safety of capital.

We believe that retail investors who are looking to invest for 3 years or more should have at least some portion of their money in equity because of its ability to earn much higher returns. Therefore, Balanced Hybrid or Conservative Hybrid funds, which invest a part of your money in equity shares, are more suitable alternatives for an investment horizon of 3-5 years. They witness sharper ups and downs than Medium Duration debt funds but the possibility of incurring a loss is substantially reduced if you invest for 3 years and above.

Taxability of earnings:

Capital gains

• If the mutual fund units are sold after 3 years from the date of investment, gains are taxed at the rate of 20% after providing the benefit of inflation indexation.
• If the mutual fund units are sold within 3 years from the date of investment, entire amount of gain is added to the investors' income and taxed according to the applicable slab rate.
• No tax is to be paid as long as you continue to hold the units.

Dividends

• Dividends paid by the mutual fund scheme are taxed at the rate of 25% (effectively 29.12%, including surcharge and cess). This is known as Dividend Distribution Tax (DDT).Though the investor does not pay this tax directly, it is deducted from the dividend income before passing on to the investor.