TAX EFFICIENCY AS SOURCE OF INVESTMENT RETURNS
An important element to maximizing total returns from an investment is to understand its tax efficiency. Due to the complexities of both investing and tax laws, many investors don't understand how to manage their portfolio to minimize their tax burden. Investors must always keep in mind that the total return earned from investments is the amount you actually get to keep after paying fees and taxes.
As per Indian tax laws, different investment instruments are taxed differently, so are the different sources of returns- income v/s capital gains. Besides, the government offers many incentives to encourage longer holding periods and investing in certain asset classes. Thus, a thorough understanding of the applicable tax rates, deductions and tax slabs can definitely help the investor earn superior return on his money.