31% Or 2.6% Tax?

A friend sent me this.

https://m.timesofindia.com/business/india-business/do-you-want-to-pay-31-tax-or-2-6/articleshow/63358821.cms

My comment:
While I agree with the article in principle that FMP is a good idea, I  want to present a picture - of when other options may be better.

There are couple of interesting things here: 

1. FD returns are charged to tax at one's income slab. It could be 30 or even 0% depending on one's total income for the year. But the 2.6% that one pays is fixed regardless of one's total income. Meaning if your father has Rs 1 lac total income he would still need to pay the LTCG (LONG TERM CAPITAL GAINS) tax mentioned in the article. If he invested in FD he would not pay any tax assuming he is in the lowest (no tax) bracket.  
2. If we are talking not about your father but about you who is in the highest bracket, then why would you want to invest in an FMP that gives you 8%-8*2.6%=7.8% return? You could perhaps think of an equity fund which over 5+ years may give you about 10% return which, even after recently introduced 10% LTCG tax, will still likely give you more than 9%. 

Additional reading:

• Income tax slab rates for senior and super senior citizens: https://www.filingmantra.com/blogs/what-are-the-slab-rates-and-calculation-for-senior-citizens-and-super-seniors - senior : 5%, 20%, 30% for income exceeding 2.5, 5, 10 lacs respectively. For super senior citizens the 5% will change to 0%.
• LTCG on Sale / purchase of multiple houses or properties: https://www.business-standard.com/article/pf/primer-all-you-wanted-to-know-about-tax-breaks-for-selling-multiple-houses-119032000330_1.html