Post-Tax Purchasing Power Matrix
Ranked from highest compounding purchasing power to highest wealth erosion.
Active Deflator: 5.0% Annual Inflation
| Rank | Asset Class | Nominal Yield | Effective Tax | Post-Tax Yield | Net Real Return | Verdict | Statutory Tax Basis |
|---|---|---|---|---|---|---|---|
| #1 | Sovereign Gold Bond (SGB) | 11.0% | -6.8% | 10.25% | +5.0% | Beat Inflation | Section 47(viic) Income Tax Act (100% Tax-Free capital gains at maturity) |
| #2 | Nifty 50 Equity ETF / Index Fund | 12.0% | -12.5% | 10.5% | +5.24% | Beat Inflation | Section 112A Income Tax Act (12.5% LTCG beyond ₹1.25L exemption) |
| #3 | Senior Secured Listed Corporate NCD | 9.5% | -30.0% | 6.65% | +1.57% | Beat Inflation | Section 56(2) Income from Other Sources (Taxed at marginal slab) |
| #4 | Gold ETF (Physical Gold Backed) | 7.71% | -12.5% | 6.75% | +1.66% | Beat Inflation | Budget 2024 LTCG at 12.5% (>12M holding) + 0.79% TER drag |
| #5 | Sovereign 10Y G-Sec / RBI Retail Direct | 7.12% | -30.0% | 4.98% | -0.02% | Purchasing Power Loss | Taxed at marginal slab; zero credit risk (Sovereign guarantee) |
| #6 | Debt Mutual Fund / Target Maturity | 7.2% | -30.0% | 5.04% | +0.04% | Beat Inflation | Section 50AA Income Tax Act (Indexation eliminated; 100% slab tax) |
| #7 | Bank Fixed Deposit (1Y - 3Y) | 7.1% | -30.0% | 4.97% | -0.03% | Purchasing Power Loss | Section 194A TDS + Taxed at marginal slab; DICGC insured up to ₹5L |
💡 Why Sovereign Gold Bonds (SGB) Rank #1 for Wealth Compounding: Under Section 47(viic) of the Income Tax Act, sovereign gold redemption capital gains are 100% exempt from income tax. In contrast, Bank FDs and Debt MFs (post-Section 50AA) face a 30%+ tax drag, resulting in negative real returns against 5% CPI inflation.