I didn't know that Indian government was allowing inflation to factored in when computing the capital gains from Mutual fund gains. Why don't they allow this for Fixed deposits.
Example from livemint
Say, you invest Rs.1 lakh in a 14-month FMP today, in the month of February. Every year, the the government releases the cost inflation index figure of the current financial year. Assume that your indexed cost price goes up 8% next year and by another 8% the following year (2014-15; the financial year in which you will sell your scheme). In this case, your cost price gets inflated—at least on paper—to Rs.1.17 lakh. Since the cost price is more than the sale price (Rs.1.12 lakh), you end up paying no tax.
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