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Investing Rs 50,000 in debt funds for a year

If you sell your investments in debt funds before three years, you will have to pay short-term capital gains tax on the returns

I want to invest ₹50,000 in debt mutual fund schemes for a year or less. Where can I get more returns than bank fixed deposits?
- Syama Sundar Nayak

Since you have an investment horizon of less than a year, you can consider investing in ultra short term schemes. These schemes may offer you a marginally better returns than bank deposits. For example, the ultra short term category has offered around 8.36 per cent in the last year, compared with 7.5-8.0 per cent interest offered by most banks. However, if you sell your investments in debt funds before three years, you will have to pay short-term capital gains tax on the returns. Short-term capital gains are added to the income and taxed as per the Income Tax slab applicable to the investor.

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