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when you make a profit it means that your selling price was higher than your cost price right now typically when you buy and sell Financial products you have to pay tax on the profit you make the good news is that for some Financial products like debt mutual funds the government lets you use indexation to pay less tax indexation basically means adjusting the purchase price of the investment to take into account inflation so if your profit actually looks like this indexation does this to it and now if your profit looks smaller to the government you have to pay less tax on it logical so how does it work what actually happens to the profit how do you benefit itamp;#39;s all explained in our blog so go read it and remember invest wise