By investing in ELSS (Equity Linked Savings Schemes) you can now save tax and aim to create wealth through equities. Section 80C of Income Tax Act 1961 allows tax payers to reduce their income tax obligations by investing in specified eligible investments like ELSS. The amount you invest can be claimed as deduction from their taxable income for the purpose of income tax computation when filing your returns. Your 80C investments should also not be made only for the purpose of tax savings, but it should also be linked to your financial goals.
Equity Linked Savings Schemes (tax saver mutual funds) are also among the most tax friendly investment schemes among the eligible Section 80C investment options. There is no taxation during the investment period, unlike many fixed income 80C investment options. Since ELSS are equity oriented schemes with a minimum investment period of three years, capital gains from Equity Linked Savings Schemes up to Rs 1 lakh in a year is tax exempt. Capital gains in excess of Rs 1 lakh in any financial year is taxed at 10%. Dividends paid by ELSS funds are also tax free in the hands of the investors
Help to save Tax up to 46,800 By investing Rs 1.5 lakhs under Section 80C of Income Tax Act 1961Click Here
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Lowest lock in period of 3 years, amongst all Sec 80C investment optionsClick Here
This is how much tax you pay
With ELSS funds, your tax reduced to
Performance comparison of investing in Equity market vs traditional tax saving products i.e. Nifty 50 TRI vs PPF & Bank Fixed Deposit.
There are several provisions in the Income Tax Act wherein salaried individuals can save taxes, but Section 80C of the Income Tax 1961 Act provides the biggest tax saving opportunity.Read More
ELSS or Equity Linked Saving Scheme is an open ended equity mutual fund that offers the dual-advantage of potential wealth creation and tax saving. These funds have a statutory lock-in period of 3 years and invest primarily in equity and equity related products.
You can annually save up to Rs 46,800 in tax by investing in ELSS. Assuming you fall in the highest tax bracket and invest Rs 1.5 lakhs.
As the name suggests, funds invested in an ELSS fund will be invested in the equity market and hence based on historical performance, a higher probability of outperforming other tax saving options.
Long Term Capital Gains over Rs 1 Lakh are taxed at 10% and dividend received by investors is tax free.
No. Since ELSS is an equity scheme it is subject to market risk and does not guarantee return.
It is advised to have a long time horizon (3+ year) while investing in this fund.
No, since there is a statutory lock in period of 3 years; early withdrawal is not possible.
This is totally on you . You can either invest Rs 1.5 lakhs lumpsum or Rs12,500 on a monthly SIP basis. Minimum investment amount via SIP OR lumpsum is Rs 500.
One big benefit over a lumpsum investment is that SIP enables you to lower the average cost of your investment and reduce the risk of your investment. This is known as rupee-cost averaging.
Yes, by having a long term horizon one can aim to create a corpus through ELSS funds due to the dual advantage of potential capital appreciation and tax saving.
No, ELSS is not completely risk free like other tax saving options such as Bank FD and PPF. Their risk profile is similar to any equity-oriented mutual fund scheme.