Sanchayaptra limit exhausted? Where to do Tax Investment?

"Tax Rebate" or "Tax Investment" remain important considerations for service-holders, and businesspeople during the month of June every year. People have to invest by 30 June in products that are eligible for the tax rebate. Naturally, this is a time when advising people about the best-fitted products for tax rebates will help them act to optimize their tax rebate.

Though there are multiple avenues (more than 20) that are an eligible investment for tax rebate, 5-6 products –  National Savings Certificate (NSC),  or Sanchaypatra, Treasury Bond,  listed Share & Bond, Mutual Funds, Deposit Pension Scheme (DPS), Insurances etc. - are most suitable for individual investors.

Before investing in a certain product, it's important to understand how much one can invest in which product and what the tax rebate would be. This is because there are investment limits for certain products e.g. BDT 60,000 in case of DPS, BDT 50 Lac in case of Sanchaypatra etc. Yet, with guaranteed return and full tax eligibility, Sanchaypatra remains as the top tax investment product till date. 

However, in Sanchaypatra, an individual can invest a maximum amount of BDT 50 Lacs against a single account. As fresh investment is required for each fiscal year to avail that year's tax rebate, investors who have already exhausted their Sanchaypatra limit need to invest in other eligible product(s). Direct investment in Secondary Shares is an eligible investment that can deliver a maximum tax rebate, though the risk of capital loss makes it less lucrative to the investors. In such a situation, investors are naturally faced with the question - "Is there a safer alternative offering a Maximum Tax rebate?"

In terms of "maximum tax rebate" and "investment security", a "Fixed-Income Mutual Fund" is the best fit. Though Fixed-Income Mutual Funds have already made their mark as a globally popular and widely acclaimed financial instrument, it didn't exist in Bangladesh before June 2021.  June 2021 saw the inception of Bangladesh's first-ever Fixed-Income, Open-end Mutual Fund called IDLC Income Fund. By investing predominantly in Government securities (40%-60%), this fund delivers stability by maintaining the optimum balance of yield, safety and liquidity. Other investment avenues are highly-rated corporate bonds, FDRs in well-governed financial intermediaries and IPOs. IDLC Income Fund is a much safer product as it does NOT INVEST IN SECONDARY SHARE MARKET. So, it delivers maximum tax rebate along with a regular, stable income.

With this intent and philosophy, within the first 6 months from launch, IDLC Income Fund has disbursed a 3% cash dividend to its investors. Also, NAVs (Net Asset Values) of IDLC Income Fund have progressed very stably and consistently since inception avoiding any volatility.

The Fund's return stands at 6.9% in 11 months (24 June 2021 to 2 June 2022) including a 3% dividend which has been disbursed on 6 January 2022 to investors as stated above.

Being the safer investment avenue and the track record it has made with performance, in a nutshell, IDLC Income Fund should be considered as the most suitable investment product to derive maximum tax rebate as well as stable, regular income for the ensuing times.

For investors who have already exhausted their Sanchaypatra limit and seeking a safer investment avenue for tax rebate, IDLC Income Fund might be the only safer choice.

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