UTI Gilt Advantage Fund, LTP, Direct (Growth)

This fund has been ranked number one by Crisil for the quarter ending March 31, 2017. The fund has generated returns of 17.5 per cent in the last one year. UTI Gilt Advantage Fund, LTP, Direct (Growth) has most of its money into government securities, both state and central government. The net asset value of the fund is around the Rs 38.84 levels and could be a good bet for those looking to generate decent returns.

Tata Gilt Mid Term – Direct (G) has no entry and exit loads

Tata Gilt Fund as the name suggests invests all of its money largely in government securities. The fund which was launched way back in 2010 has given returns of 9.18 per cent on an average each year in the last 7 years. Under the growth plan the net asset value at the moment is Rs 18.57, while under the dividend plan it is around Rs 15.50. Go for this fund if you are looking for safety and decent returns. Good for retired folk, as the dividends are tax free in the hands of the investors. 

Reliance Gilt Fund

Reliance Gilt Fund has generated a returns of 12.96 per cent on an average in the last three years. The fund has investment in government securities including some of the state government securities. Under the dividend plan you can buy the scheme at around Rs 10.05 per unit. Remember, that dividends are tax free in the hands of the investors, while if you go for growth scheme, you might end-up paying capital gains tax. The growth plan has an NAV of around Rs 22.79.

SBI Magnum Gilt - Long Term Plan - Direct Plan

This fund has been ranked number two by Crisil and is a good long term bet. The fund has an asset value of around Rs 39 and has generated a return of 16.5 per cent per annum. The two year returns is more like 13.1 per cent. There is no entry and exit load on this fund and bulk of the amount like peers is in very safe instruments. It makes sense to go for this scheme for retired individuals and those who are looking at safety.

Taxation on Gilt Securities

If you opt for the dividend scheme there is no tax that is payable upto a limit of Rs 10 lakhs per year. However, the debt fund will end-up paying the Dividend Distribution Tax from the income the fund generates. In Short, it is indirectly borne by you. In case you opt for the growth scheme and sell the same, you will have to pay capital gains on the same.