Your Payable Tax
Your Tax after investment
Disclaimer: This material is created to explain basic financial / investment related concepts to investors. Mutual Fund does not provide guaranteed returns. Investors are advised to seek professional advice from financial, tax and legal advisor before investing.
Equity Linked Savings Scheme (ELSS) funds are tax-saving mutual funds in India. These investments combine the benefits of equity investments with tax deductions under Section 80C.
These ELSS schemes come with a 3-year lock-in period. Once the lock-in period is over, investors are free to redeem their units or switch. As per CBDT rules, ELSS shall remain invested to the extent of at least 80% in equity and equity related securities. So all ELSS schemes are required to invest in equities and equities are always subject to volatility.
ELSS schemes may be an ideal option, but investors investing in any mutual fund should carefully consider their risk tolerance, investment goals, and time horizon.
The primary benefit of ELSS is tax saving. By investing in ELSS, you can claim annual tax deductions on investments up to Rs.1.5 lakh under Section 80C.
Based on a SIP of 10,000 in S&P BSE Sensex on the last day of each month. As on: 31st January 2020. Source: Bloomberg
Past performance may or may not be sustained in future
When you invest in ELSS of up to Rs 150000, you can claim taxation deduction of up to Rs.46,800 every year and a chance to create wealth.
Issiliye sochna kya hai, #ELSSHaiNa.
ELSS is like any other open-ended equity fund. It's just that it has a lock-in period of 3 years, which means you can't redeem the investment before 3 years from the allotment date.
Money is invested in equities, which holds the potential to create wealth over a period of time. With ELSS, you can plan long-term financial goals such as your retirement, children's education and their marriage, or anything, with ease. When you invest in ELSS of up to Rs 150000, you can claim taxation deduction of up to Rs.46,800 every year and a chance to create wealth
Since the money is invested in equities, it has the potential to create wealth over a long-term period.
There is no right or wrong time for investing in equity mutual funds. Don't try to time the market. The sooner you invest, the better!
ELSS has one of the shortest lock-in periods compared to other tax-saving instruments. Just 3 years!
And it is a good thing. Here's why.
The inherent advantage is that money stays invested.
The answer is either.
For example, assuming you want to invest Rs. 1.5 lakhs in ELSS, you can either do so in one go or else do a SIP of Rs. 12,500 per month to avail tax benefits during a particular financial year.
An SIP is a hassle-free way to invest your money in equity mutual funds. The minimum investment amount in ELSS for SIP or Lumpsum is just Rs. 500.
Remember, ELSS has a lock-in period of three years. Meaning, you will not be able to redeem your units before the completion of three years. Post redemption it will be taxable as Long term capital gain (LTCG). Long-term capital gains (LTCG) up to Rs 1 lakh is tax-free and LTCG over Rs 1 lakh is taxable at the rate of 10% without the benefit of indexation.