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Fixed Maturity Plan (FMP)

A fixed maturity plan (FMP or interval fund) is a debt mutual fund, with a fixed investment and maturity date. It provides a fixed return in this period, though the rate of return is not known in advance. Money cannot be withdrawn in the interim.

A FMP usually provides a slightly higher return than a bank fixed deposit. Also, if the tenure of investment is greater than one year, the FMP is more tax efficient. FMP gains are then taxed at only 10%. The interest on fixed deposit is taxed based on your income for the year. This can be as high as 20% or even 30%.

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