Oct 24, 2016 3 min read

Best Tax-Saving Tip for the Assessment Year 2017

If you are looking for an efficient tax-saving tip in order to manage your taxes for the financial year 2016, then this blog is a must read for you.

Are you done with your tax planning for the current financial year? Are you in search of some better alternative to manage your taxes and save on them? If yes, then you need not take burden anymore, because we have the most effective tax-saving tip for you, i.e., ‘ELSS Funds’.

The most challenging task for everyone around is planning the taxes. Although an apt decision is rewarding enough as it helps one in saving the money, but if made wrong, it leads to an unsatisfactory result. So, one needs to take due care and be alert while doing tax management. Here we have provided you with an efficient way of managing tax and making a result-oriented investment.

Before we understand how ELSS offers tax benefits, it is essential to know what it actually means. A very simple definition of the ELSS Fund is that it is an open-ended ‘Equity Mutual Fund’ which not only helps in saving taxes but also offers an opportunity to grow wealth out of the hard-earned money. In addition, it also qualifies for exemptions under section 80C of the Indian Income Tax Act,1961.

Why Should One Opt for Equity-Linked Saving Scheme?

ELSS is among the best avenues to save tax under the Indian tax regime. Along with that, it also provides investors with an option to avail the benefits of investing in the equity market. Furthermore, among the various tax model of the Income Tax Act, ELSS falls under the EEE model. According to which, it provides tax exemption for the following amounts:

  • Money invested by the investor in ELSS fund
  • The returns generated on the investment value
  • The capital gain fetched by the investors at the time of redemption

There are various other advantages as well which investor can avail by investing the money in the equity linked saving scheme of mutual funds. They are as under:

  1. It has the lock-in period of three years only, which is more than the other tax-saving alternatives, i.e., NSC(maturity period six years) and PPF(maturity period of fifteen years).
  2. It falls under the equity asset category and hence possesses the high potential of yielding remarkable returns.
  3. Investors have the option to choose the dividend plan and avail some extra earnings during the lock-in duration.
  4. It also provides the Systematic Investment Plan to make an easy investment initiating with just Rs.500 per month.

Some of the best-performing ELSS funds from the top mutual fund houses are mentioned below:

  • Reliance Tax Saver(ELSS) Fund (G)
  • Axis long Term Equity Fund (G)
  • Birla Sun Life Tax Relief 96 (G)
  • DSP BlackRock Tax Saver Fund (G)
  • Franklin India Tax Shield (G)

These schemes are offering unexpectedly higher returns over time and helping investors in growing their money into wealth.

With the probability of saving tax up to Rs.1,50,000, it offers the most effective tool for making a worthwhile investment. One can claim the deduction from one’s total gross income to lessen down the net taxable income and hence the tax liability. It is the best strategy to avail the dual benefits of yielding higher profits from the equity investments and saving on the taxes.

We are sure enough that this tax-saving tip, i.e., investing the money in ELSS funds shall definitely be helpful for you to manage your taxes for the assessment year 2017.

If you are in need of any personal finance guidance, then you must get associated with our expert financial advisor at MySIPonline to avail their services 24/7. They would assist you in making a profitable investment portfolio to gain tax benefits as well as higher profits.