HDFC Fixed Maturity Plan - Series 37HDFC Mutual Fund has launched “ HDFC FMP 1178D February 2017 (1) ”, under its close-ended income scheme, HDFC Fixed Maturity Plans – Series 37.

The scheme’s objective is to make investments in debt market instruments and government securities that are maturing on or before the scheme’s maturity date to generate regular income.

The tenure of the scheme is 1178 days from the date of allotment of units. The face value of the new issue will be Rs. 10 per unit. The new issue will be open for subscription from 13 Feb. 2017 to 20 Feb. 2017.

HDFC FMP 1178D February 2017 (1)
NFO Open13 Feb. 2017
NFO Close20 Feb 2017
Allotment Date21 Feb 2017
Date of Maturity13 May 2020
Scheme TypeA Close ended Income Scheme
Minimum Application Amt5000
BenchmarkCRISIL Short Term Bond Index
Offer PriceRs. 10
Investment OptionGrowth & Dividend Payout

Fund Suitability

The Scheme is suitable for investor

  • Who want to lock in their  investments at prevailing yields
  • Investor looking for better post tax returns taking the benefits of indexation
  • Whose investment horizon matches the tenure of plan
  • Investor who want lower volatility in the returns

Tax Benefit

Investing in HDFC FMP 1178D February 2017 (1) shall enable the investors to avail the four indexation benefit on holding the investments till maturity. Indexation of cost of acquisition means raising the cost of investments till maturity. Indexation of cost of acquisition means raising the cost of investment depending on the Cost Inflation Index (CII) value in the financial year of purchase and sale of units, money lost due to the effect of inflation and then calculates the tax on the balance. Therefor, tax is calculated only on the gain after adjusting for inflation.

How does four Indexation benefit work

For the amount invested in Feb 2017 (FY 2016-17) and redeemed in May 2020 (FY 2020-21) hence the investor is eligible to take four indexation benefit across five financial years viz. FY 2016-17, FY 2017-18, FY 2018-19, FY 2019-20 and FY 2020-21.

Term DepositTaxation on FMP--(with indexation)
Rate of Interest %5%7%9%5%7%9%
Maturity Value -Gross117383124889132722117383124889132722
Indexation Cost------132042132042132042
Capital Gain/Interest173832488932722-14659-7153680
Tax Rate30.90%30.90%30.90%23.07%23.07%23.07%
Taxable Income173832488932722----680
Tax Liability5371769110111----157
Post Tax Value of Maturity112012117198122611117383124889132565
Post Tax Gain120121719822611173832488932565
Post Tax Gain (CAGR)3.51%4.95%6.40%5.00%7.00%8.96%

  • ## In case the investment is made in the FY 2012-13 and redeemed in the FY 2016-17, the investor gets indexation benefits across 4 financial year. CII is  1125 – FY 2016-17 , 1081 – FY 2015-16, 939 – FY 2015-14, 852 – FY 2014-13
  • The Tax Rate assumed is the highest rate based on current tax slabs
  • Taxable income is zero as the indexed cost of acquisition is greater than the maturity value

Call your  Mutual Fund adviser, agent, broker, Distributor  for Investment    

Pune Invest – Rajendra – 77 1991 7444

Source : HDFC FMP 1178D Feb. 2017 (1) – SID/KIM & Product Note