Where do FMP's invest?
They invest in fixed income instruments, like certificate of deposits (CDs), commercial papers (CPs), treasury bills, money market instruments, corporate bonds and securitised debt. It depends widely on the tenure of the FMP where fund manager invests into instruments with similar time frame.

Maturity Period
They come with different maturities such as monthly, quarterly, half-yearly, annually and even plans with maturity of more than 1 year.

As these are close-ended schemes. There is no entry load for investment into FMP but they do have an exit load depending when it is being redeemed.

Withdrawal
Investors can withdraw their investment from the fund before maturity but they have to bear an exit load i.e. penalty for early withdrawal.

Returns & Tax implication
These are tax-efficient schemes which do not provide guaranteed return but their returns are favourable and steady. They normally have higher tax efficient returns compared to bank deposits and other liquid funds.

Dividend option:
Dividend in the hands of the investor is tax-free but the investors" will receive the same after deduction of dividend distribution tax (DDT).

Growth option:

1. If you invest in the growth option of the FMP for less than a year, the gains are added to the investor's income and taxed at the investor's income tax slab rate.
2. If you invest in the growth option of the FMP for over a year, you pay either 10% capital gains tax without indexation or 20% with indexation. Indexation is the process by which inflation is taken into account while computing the tax liability.

Benefits of investing into FMP: