New Year is coming and most of the people are studying and investing in tax saving plan to save their tax. With the help of experts, we bring to you the plan by choosing a plan where investment not only saves tax but also gives good returns.
ELSS i.e. Equity Linked Savings Scheme is a diversified equity fund. The majority of this fund is held in equities. The best part is that investment in this gets exemption from income tax under section 80C of income tax.
Equity Linked Savings Scheme comes with a lock-in period of three years. Since this fund is diversified, the risk in it is low. It can also be invested through SIP.
Benefits of investing in ELSS (Equity linked saving schemes)
There are many options for investing in Equity Linked Savings Scheme. You can invest in this with the help of an agent sitting at home. There is no maximum investment limit and maximum tax exemption of Rs 1.5 lakh is available on investment in this.
You can stay in it even after maturity. On choosing the dividend payout, there is also an option to withdraw money in between and in this instead of interest on investment, market linked returns are available.
Choose ELSS only for tax saving
Equity Linked Savings Scheme (ELSS) is not just a tax saving option, with it, you also get good returns. With its help, you can make your portfolio diversified. Most of the ELSS schemes are multi-cap oriented. You can give more space to ELSS funds in your portfolio. These funds are better for long term goals.
Do not expect unwanted returns from investing in Equity Linked Savings Schemes. ELSS are equity funds and equities keep on fluctuating. Long term is more beneficial with a lock-in of 3 years. It is right to divide the investments from the beginning of the financial year.
Regular Mutual Funds or ELSS
At least 80 per cent of Equity Linked Savings Schemes (ELSS) investments are in equity funds. Whereas, at least 65 percent of the regular scheme’s investment goes in equities. Investing in ELSS is possible in different market caps. And in this, tax exemption is available on investment under 80C. ELSS has a lock-in period of 3 years whereas, there is no lock-in in the regular scheme.
Don’t choose ELSS just because of the lock-in. Tax saving is an important part of your investment strategy if you choose this type of investment in mutual funds India.
Invest in Tax Saving Funds here for tax exemption
There are many investment options for income tax exemption. You can also invest in Employees’ Provident Fund, Public Provident Fund (PPF), National Pension Scheme (NPS), SukanyaSamriddhiYojana (SSY), Unit Linked Investment Plan (ULIP), Tax Saving Fixed Deposit or National Savings Certificate (NSC).
As experienced experts advise, you should never limit yourself to a single direction. A diversified portfolio of capital investments will make it possible to make a guaranteed profit, because three or four directions cannot be losing at once. Like, you can invest in lifetime retirement investment schemes, financial services protection schemes, and online trading in commodity market.