Question

What tax advantage do Fixed Maturity Plans (FMPs) offer over Fixed Deposits (FDs)?

a.

Higher tax rates

b.

Tax-free returns

c.

Indexation benefit

d.

Guaranteed returns

Answer: (c).Indexation benefit Explanation:Fixed Maturity Plans (FMPs) offer indexation benefit for investments of more than a year, providing tax advantages over Fixed Deposits (FDs). Indexation helps compensate for the impact of inflation on real income.

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Q. What tax advantage do Fixed Maturity Plans (FMPs) offer over Fixed Deposits (FDs)?

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