Are you looking forward to save TAX on Investment?
ELSS Funds is one the best option to save tax.
ELSS are basically diversified equity funds.
Investments of up to 1.5 Lac done in ELSS Mutual Funds are eligible for tax deduction under section 80C of the Income Tax Act. While there is no upper limit to the amount that can be invested, a maximum of Rs. 1.5 lakh is eligible for a tax deduction as per the Income Tax rules and you can save up to ₹46,800 a year as tax amount.
Unit Linked Insurance Plans (ULIPs) and the National Pension Scheme (NPS) also do the same but they have a higher lock-in period & lesser potential of returns.
The advantage ELSS over other tax Saving instruments is that, it has shortest lock-in period of 3 years.
Tax-saving fixed deposits have a five-year lock-in, while PPF has a 15-year maturity. All in all, ELSS offers more liquidity in the medium term.
Some of the top ELSS Funds have given an average return of 23% for 3yrs and 15% for 5yrs as or 12th Sept 2022.
Another advantage is better post-tax returns. Long Term Capital Gains from ELSS are tax free up to limit of ₹1 lac. Gains over 1 lac attracts a tax rate of just 10%. Lower tax rates, coupled with higher returns ensure the best post tax returns.
All in all it is easy to invest in ELSS funds through a monthly SIP.
