“Nothing is certain but death and taxes” goes the proverb.
With some exceptions, most forms of income generated through investments are taxable. Hence, the correct way of evaluating returns from an investment is after accounting for taxation.
You may have earned a 10% return, but if you need to pay 30% taxes on the return, what you are left with is only a 7% return, after taking out 30% of 10 which is 3.
Holding on to and maximizing gains requires being tax aware.
Certain investments, such as the Public Provident Fund (PPF), have been tax-friendly on both ends, the investment end as well as the earning end. Investments made in PPF accounts have been permitted for setting off income against, subject to certain limits. Thus, the investor benefits on both sides.
