Post tax return

In investment you normally get profit. Say you invested Rs.1000 in Bank Fixed Deposit for 1 year and after one year got Rs.1100. Hence you got a return of Rs.100 and calculated in percentage terms it will be 10%.

But you forget to take into account one more factor, TAXATION, which will effectively reduce your return calculated.

If you fall in 10% tax bracket then your returns will be Rs.100 minus Rs.10. Hence your effective return will be Rs.90 or 9%

If you fall in 20% tax bracket then your return will be Rs.100 minus Rs.20. Hence your effective return will be Rs.80 or 8%

If you fall in 30% tax bracket then your return will be Rs.100 minus Rs.30. Hence your effective return will be Rs.70 or 7%

Further any Cess, Levy etc added to income tax will reduce your real return.

Hence, its important for you to note not only the return on your investment but knowing the post tax return is also important as it decides the return at your hands.