Many investors park their surplus fund in fixed maturity plans (FMPs) and other debt funds in March every year to take advantage of the double indexation benefit and to bring down the tax liability on returns. This year, these investors are also expecting capital appreciation on these investments as they are hopeful of a series of policy rate cuts by the Reserve Bank of India (RBI)."Investors take advantage of double indexation by investing in March of year 1 (FY 2012-13) and then selling in April of year 3 (FY 2014-15). This virtually brings down the tax impact to a very low level if not to zilch. This means whole yield on such investments becomes tax free," says Jignesh Shah, executive director, Sarasin Alpen.

Source - http://economictimes.indiatimes.com