Indexation on Mutual Funds
Indexation on Mutual Funds helps investors in long-term debt funds to save taxes. If you sell investments in debt funds after three years, the gains are treated as Long Term Capital Gains (LTCG). LTCGs are taxed at 20 percent with the indexation benefit. Indexation allows you to inflate the purchase price using cost Inflation index. It is a prudent way of not losing money by way of taxes. It helps us in inflating the purchase price of the debt mutual fund meaning we can reduce our tax liabili ...