Why Is ELSS an Essential Part of Every Investor's Portfolio?
Tax, a single word that can send chills down anyone’s spine. The pressure and pain of filing tax returns every year are not new. Throughout the year we search for ways by which we can save something from these returns and usually fail to find a good way. Well, not anymore because we have already found the perfect way for you.
“Tax Saving- Is it even possible?”
Millions of taxpayers in India have this question in their mind and well the answer to this question is yes, and not only one there are a few ways but today we will talk about the best one among them, i.e., Equity Linked Savings Scheme(ELSS). ELSS is basically a type of mutual fund scheme whose main objective is to provide tax exemption on your income and the secondary is to offer growth on the amount that you have invested.
People are often confused that how tax exemption process works and is it allowed by the government. Well, yes under section 80C, you can claim a tax deduction, equivalent to the amount that you have invested in from your gross income. The maximum amount that is eligible for the tax break is Rs 1.5 lakhs, any amount exceeding that will not be considered for exemption. For example, let’s say Ram invest Rs 1.5 Lakhs in ELSS scheme, assuming he falls in the highest tax bracket category and is eligible for an exemption of 30%. So, the tax rebate he will be getting is Rs 45000 which means that the total investment comes down to only Rs 1,05,000. Now, even if Ram invests Rs 2.5lakhs, he is only eligible for a maximum of Rs 45000 rebate on his total income.
Single Scheme, Multiple Benefits
ELSS can help you save tax, but this is not the only benefit it will give you. The other benefit you will be getting are the returns on the amount you have invested. ELSS is an equity-based scheme and can give your wealth a good opportunity to grow while saving you thousands in taxes making it one of the best mutual fund schemes.
Also, ELSS funds have the minimum lock-in time in all the tax saving instruments that fall under Section 80C of the Income Tax Act, 1961 which is 3 years. This states that if you are not satisfied with the scheme or want to redeem the amount from the scheme, you can do it easily after 3 years.
What Is the Best Time for Investment?
The perfect time for an ELSS investment is at the start of a new financial year. And, the best way to make investment is through SIP as it not only gives you a chance to accrue the benefit from rupee cost averaging, it will also lower the burden of bulk investment which you have to face while making a Lumpsum investment.
Don’t worry if you haven’t started your SIP yet, as you can always increase the SIP premium to cover up the time you have lost.
Some of the Best ELSS Schemes That You Can Choose to Invest in
- Reliance Tax Saver Fund
- DSP Black Rock Tax Saver Fund
- Axis Long Term Equity Fund
- Aditya Birla Sun Life Tax Relief 96 Fund
- Mirae Asset Tax Saver Fund
- L&T India Tax Advantage Fund
ELSS being such a good scheme, should be a part of every tax-payers investment planning as it is something that just can’t be missed. It is your personal tax saving companion in the disguise of a mutual fund scheme and the best thing is it is just a few clicks away. Just keep in mind to do thorough research beforehand and only choose a scheme that suits your flavour.
For any kind of advice or query regarding ELSS schemes, you can connect with the financial experts at MySIPonline and can get your queries rectified, free of cost.
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