How do taxes affect future value calculations?

Taxes can significantly impact an investment's future value, so they need to be factored into future value calculations. The interest earned on investments like fixed deposits, savings accounts, bonds, etc., is subject to tax.

Tax-saving investments like PPF, ULIPs, ELSS, etc., offer tax exemptions under different sections of the Income Tax Act. Since the principal and gains are not taxed, the post-tax returns in these are higher, increasing the future value.