Indexation: A technique which helps you save taxes on long term debt mutual fund
BW Businessworld brings you Mutual Fund Corner where we will take a close look on Indexation, which is a technique used to adjust the purchase price of certain investments for inflation. We can simply say if you take inflation into account then your returns are actually lower. It is this adjusted amount that is your real rate of return. If held for three years investors have the option for paying long term capital gain tax at 20% with this indexation benefit versus paying a flat 10% tax without indexation.