- Investors can claim a tax rebate of up to Rs 1,50,000 under Section 80C, resulting in savings of up to Rs 46,800 per year (as per old tax regime).
- The short lock-in period, tax benefits, and potential for long-term wealth creation make ELSS funds an attractive investment option.
DEEPAK JAIN
ELSS (Equity Linked Savings Scheme) is a mutual fund that provides tax benefits to investors under Section 80C of the Income Tax Act. It is a popular investment option among individuals who are looking to save on their taxes while also earning potentially higher returns on their investment. ELSS funds invest a minimum of 80% of their portfolio in equity and equity-linked securities, which may also increase the volatility. Over longer term we have seen that the benefits are commensurate with the underlying risk.
Tax benefits
One of the main advantages of investing in ELSS funds is the tax benefits that they offer. Investors can claim a tax rebate of up to Rs 1,50,000 under Section 80C, resulting in savings of up to Rs 46,800 per year (as per old tax regime). This benefit is in addition to the returns earned by the investor.
Initial lock-in period is 3 years
ELSS fund can be withdrawn, fully or partially after as short initial lock-in period of 3 years, should there be a need to do the same. We encourage investors to stay invested for the long term and benefit from the power of compounding.
ELSS investment fund options available for saving tax. It invests in equity and equity-related instruments and has a well-diversified portfolio across sectors with a multi-cap approach. The fund is managed by experienced professionals who aim to provide investors with inflation-beating returns over the long term.
Investors can choose to invest in ELSS funds via a lump sum or SIP (Systematic Investment Plan). A lump sum investment involves investing a large sum of money at once, while SIP involves investing a fixed amount of money at regular intervals. Investors can choose the investment route that suits their investment profile and requirements.
Comparative analysis will be very helpful
When choosing an ELSS fund, investors should undertake a comparative analysis of the equity-linked savings schemes being offered by the mutual fund houses. They should consider factors such as the fund’s investment objective, portfolio composition, past performance, and fund manager’s experience before making an investment decision.
Investors can set up an account with the mutual fund house or through a broker or investment app. The process of investing in ELSS funds is straightforward and can be completed online.
In conclusion, ELSS is an excellent investment option for individuals who are looking to save on their taxes while also earning returns on their investment. The short lock-in period, tax benefits, and potential for long-term wealth creation make ELSS funds an attractive investment option.
