Santosh Mishra, 47, a Delhi-based Supreme Court lawyer, wished to invest a lump sum amount for around three years. Being a risk-averse investor, he planned to put his money in fixed deposits. His financial planner friend, however, suggested that he should consider investing the money in fixed maturity plans (FMPs) due to the considerable tax arbitrage that they enjoy vis-a-vis fixed deposits. Owing to this, his friend said, Mishra would be able to earn much better post-tax returns from an FMP than from a fixed deposit.
A closed-end product: FMPs are closed-end debt funds that have a fixed tenure. You