This compares favourably against a one-year term deposit in a bank with better liquidity too. Fixed return investors should choose the growth plan of any debt fund to enhance their yield and reduce tax. With an average return of 9.89 per cent, the effective post-tax yield will be 7.7 per cent after the 22 per cent dividend tax. We take a closer look at the budget implication on the information technology sector. For the past two years, technology funds have been on the forefront for a while and even a diversified equity fund today is loaded with tech stocks.
Most funds owe their spectacular performance to the high allocation to tech stocks.
The positives for the information technology stocks handsomely outnumber the negatives, even though valuations look stretched on conventional basis. The key negative was the imposition of tax on the export income of software companies. This will lead to a 7.7per cent slip in the bottom line in the earnings of a company with 100 per cent export income. This effective means that all the leading software companies will be marginally hurt. Besides, the dividend tax will reduce dividend yield.