Enrichwise RetireMax Strategy: How to Legally Save ₹23L+ in Taxes?
For many retirees, Fixed Deposits (FDs) have long been the preferred choice for preserving wealth. They are perceived as safe and reliable. However, one often-overlooked downside is tax inefficiency.
Even if you don’t withdraw the interest, tax is still deducted annually, significantly reducing your overall returns. Over time, this tax outflow erodes your savings, making FDs far less efficient than they appear on paper.
For example: You invest ₹1 crore in an FD at 8% interest and fall into the highest tax bracket (let’s assume 35%). Here’s how taxation impacts your earnings over six years:
Age 55: Earn ₹8L → Tax paid ₹2.8L
Age 56: Earn ₹8.41L → Tax paid ₹2.9L
Age 57: Earn ₹8.85L → Tax paid ₹3.0L
Age 58: Earn ₹9.31L → Tax paid ₹3.2L
Age 59: Earn ₹9.79L → Tax paid ₹3.4L
Age 60: Earn ₹10.30L → Tax paid ₹3.6L
The total tax outflow in FD’s ₹23L+ when you include compounding. Which means that by the time you retire, a significant chunk of your returns has already been paid in taxes, reducing your effective gains.
What’s a more tax-efficient alternative? – Debt Mutual Funds
Here’s what your tax looks like with Debt Mutual Funds:
Age 55: Earn ₹8L → Tax paid NIL
Age 56: Earn ₹8.64L → Tax paid NIL
Age 57: Earn ₹9.33L → Tax paid NIL
Age 58: Earn ₹10.07L → Tax paid NIL
Age 59: Earn ₹10.88L → Tax paid NIL
Age 60: Earn ₹11.75L → Tax paid NIL
Total tax paid? ZERO
Unlike FDs, Debt Mutual Funds are classified as capital assets. This provides a significant tax advantage:
No annual taxation on gains, your returns compound without deductions.
Tax is deferred until withdrawal, allowing you greater control over when and how much tax is paid.
In the above example, By opting for Debt Mutual Funds instead of FDs, investors can save over ₹23L in taxes by deferring withdrawals. And they still maintain liquidity and stability.
At Enrichwise, we call this the RetireMax Strategy. It is a structured approach designed for those approaching retirement and to help investors maximize their post-tax retirement wealth.
To explore how this strategy could work for you, connect with us today.
Contact +919821860804 or email planner@enrichwise.com
Kapil Jain is the Director of Enrichwise Financial Services Pvt. Ltd and Enrichwise Insurance Broking Services Pvt. Ltd., an IIM Indore Gold Medalist in Finance and an investor for 25+ years.
Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. This article is for informational purposes only and does not constitute investment advice. Tax benefits are subject to changes in law. Enrichwise is an AMFI-registered Mutual Fund Distributor (MFD).