Answer

1. F

   Facts

   The first investment decision is choosing the right fund category. Wrong category for your time horizon costs 3-8% return annually. Equity in a 1-year horizon risks capital loss. Debt post-April 2023 has lost indexation advantage. Know the matrix.

2. P

   Provisions and law

   • Sec 112A
3. A

   Analysis

   The 3-bucket framework: Short term (0-3 years) → Debt/liquid/ultra-short funds. Medium term (3-7 years) → Hybrid / balanced advantage funds. Long term (7+ years) → Equity / index / flexi-cap funds. Choosing equity for a 2-year goal = wrong bucket = 20% STCG if you sell early or capital loss if market falls. Debt MF reality post April 2023: Indexation removed. All debt MF gains taxed at slab rate regardless of holding period. A person in 30% bracket holding debt MF for 5 years: gain taxed at 30%, not 20% with indexation. FD and debt MF now have similar tax treatment. FD has guaranteed return. Debt MF has duration risk. Advantage of debt MF: no TDS on gains (only 10% TDS on dividend). FD: 10% TDS on interest above ₹40K. Category map: Liquid fund (< 91 day maturity, lowest risk, best for emergency fund and parking).

4. C

   Conclusion

   1. 1Identify time horizon for each investment goal (< 3 years / 3-7 years / 7+ years)
   2. 2Match category to horizon: short → debt/liquid, medium → hybrid, long → equity
   3. 3Tax bracket check: 30% bracket + debt MF = slab rate = 30%. Consider FD or arbitrage fund comparison.
   4. 4For Sec 123, Income-tax Act 2025 (old Sec 80C): ELSS (equity, 3-year lock-in), check vs PPF for safety or NPS for extra deduction
   5. 5Choose direct plan always, save 0.5-1% expense ratio annually
   6. 6Platform selection: CAMS MFCentral, Kuvera, Coin (Zerodha), all offer direct plans free

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.