Banking News

Investments in ELSS (Equity-Linked Savings Scheme)

Investments in ELSS (Equity-Linked Savings Scheme)


Equity-Linked Savings Scheme (ELSS) funds are the most preferred tax saving instruments in the current year. The investment in the scheme offers you income tax rebate u/s 80 (C ) of IT act to the maximum limit of Rs. 150000.00 in a financial year with the shortest lock-in period of 3 years.

TAX rule (EEE):  Investment is eligible for tax exemption u/s 80 C, Return on the investment is eligible for tax exemption and Redemption proceeds are not added to taxable income.

 The ELSS is an open ended diversified equity fund offered by mutual funds. In this scheme, the investor’s money is chiefly invested in the portfolio of equity shares. In the recent past, investment in ELSS has given very good returns to the investors even in the bearish market (18.5% average annualized return for 3 years, 17.50% in the past 5 years). Axis long term equity fund, Birla Sunlife relief 96, DSPBR tax saver fund, Franklin India Taxshield Funds were some of the last year’s best portfolio funds managers to quote who have earned good profits to the investors.

Highlights of ELSS funds

  • The 3 years lock-in period is the shortest among the tax saving instruments and investor can safely recycle his investments every three years and claim tax benefits on the reinvested amount.
  • No tax payable on the profit earned from ELSS.
  • The minimum investment is as low as Rs.500.00
  • There is no compulsion to continue investments in subsequent years.

If you wish to invest in ELSS, you must remember that the money deposited by you in the scheme is reinvested by funds manager in equity related investments. Such investments are exposed to market risk. Even a fund which is showing very good performance at present may end with disappointing returns at a future date. Investors who have the appetite for risk could consider the option of investing in ELSS.

Related articles:

Retired? make informed decisions related to your investments

Figure out the tax saving instruments which suits you most
Know about PPF account benefits
Investments in senior citizens savings scheme
Investment in Sukanya Samriddhi Scheme
Income-tax rebate on the purchase of NSCs
Details on NPS (new pension scheme)
Income-tax-rebate-on-ULIPs

Interest rates on small savings schemes

Advantages of sovereign gold bonds over physical form of gold
All about different kinds of Mutual funds
Arbitrage funds for risk-free investments
Distinction between liquid fund and ultra-short funds

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *


Comments

Latest Tweets

error: Content is protected !!

Sign up for our News Letter

We will let you know when new articles are posted on this site.

Privacy Policy. This information will never be shared.