According to data released by the Statistics Ministry in New Delhi, the Consumer Price Index, or CPI, rose 7.31% in June and 8.28% in May. No one has to spell it out that inflation corrodes your savings. For instance, an investment in fixed deposits assures you of a definitive return, currently the 1-year return on a bank fixed deposit is between 8-9%. Take tax and inflation into account, and your investment would have defeated its purpose.Equity is one asset class that manages to outperform inflation over time. And, believe it or not, it does have a tax break. The tax on long-term capital gains is zero, which means you pay no tax on the return you earn from your investments if you hold it for at least a year. In the long run, this amounts to a huge savings. In fact, stocks and equity-backed investments (equity mutual funds and equity oriented balanced funds) are the only asset classes which are completely exempt from tax on long-term gains. So let's say you invested in Franklin India Prima Fund a decade ago. Your annualised return of 20% not only beats inflation hollow but you pay no tax on the return. So despite the volatile markets over the past decade, you would still be a winner.