Bound by the limit of Sanchaypatra, worried by the risk of stock volatility - where will the tax investment go?

As a safe and good return-generating investment product, National Savings Certificate (popularly known as Sanchaypatra) is undoubtedly the most popular solution as an eligible investment for tax rebate.

The only constraint it has is the investment limit – an individual can invest maximum Tk50 lakh in Sanchaypatra in his/her whole lifetime.

This limit poses a critical challenge for the tax payers falling in higher tax bracket. The requirement of new investment every year for tax rebate and exhaustion of Sanchaypatra investment limit leave the investors with few (or, no) good options.

For a High Net Worth (HNW) investor, when the Sanchaypatra limit is over, s/he usually has to consider investing in secondary shares. However, investment in shares has significant risk. There are other options like DPS, Life Insurance etc. but these also have limits and a HNW investor usually has to invest more to avail the maximum tax rebate.

Investment into Government Bonds is also a good option, but the investment process is very cumbersome for an individual.

So, there is a gap of solution for a High Net Worth individual once his/her Sanchaypatra limit is over – s/he has to enter into a risky option to avail the maximum tax rebate. There was barely any convenient solution available.

The question – is there any product that fills up this gap? 

Yes – a product category called "Debt Mutual Fund" solves the challenge rightly. 

IDLC INCOME FUND  is the first-ever Debt Mutual Fund in Bangladesh launched in June, 2021.

The fund delivers the value by striking the optimum balance of return, safety, and maximum tax rebate.

IDLC INCOME FUND predominantly (40%-60%) invests in Govt./Govt.-backed securities like Treasury bills, T-Bonds. Besides this, other investment avenues are Corporate Bonds of very high credit rating, fixed deposits in well governed financial intermediaries and in IPOs when companies collect funds from primary market.

The Fund does not invest a penny in the secondary share market; so, volatility of secondary shares does not affect this Fund. 

IDLC INCOME FUND delivers like an FDR with maximum tax rebate. 

Specially, as this fund is an eligible investment for tax rebate and there's no limit of investment to this fund, an investor can derive maximum tax rebate from his/her investment to IDLC INCOME FUND.

In about the past 2 years (23 months) since inception, the fund has generated an average annual compounded return of 7.60%.

Also, the Fund has disbursed Cash Dividend every 6 months till date. Considering Fund's return and the maximum tax rebate (15%), effective return from IDLC INCOME FUND is way higher than any other comparable options like FDR. ​

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