Equity Linked Savings Scheme (ELSS)


An Equity Linked Saving Scheme is an equity mutual fund that invests primarily and exclusively in equities. These mutual funds are a unique category that qualifies for tax deductions under Section 80C, the Income Tax Act of 1961. They are also known as tax-saving mutual funds.

What are the Benefits of Investing In ELSS Mutual Funds (MFs)?

ELSS mutual funds offer the possibility to earn decent returns and save taxes. These funds invest at most 80% of their assets in equities. The stock market's performance directly affects the potential returns. This is a good option for those who want to invest long-term goals, such as buying a house or creating a retirement fund.

Investments up to Rs. 1.5 lakh are eligible for a tax deduction. 1.5 lakh each year. The mandatory lock-in period for these funds is three years. This lock-in period is among the most short of all tax-saving investment options. These benefits make ELSS funds a popular choice for investors.

When is the best time for ELSS investments?

To save taxes, many investors invest in Equity Linked Saving Scheme Fund funds at the close of each financial year. This strategy may not be considered a good one. This is a good reason to invest in these funds. However, it should not be the only reason you consider investing in these funds.

Long-term investing is the best way to reap the benefits of such funds. Identify your investment goals and then invest Systematic Investor Plans (SIPs). You can reduce market volatility by investing steadily throughout the year and increase your wealth over time.

Features of Equity Linked Saving Schemes (ELSS funds)

Its most popular features are:

• A short lock-in period
Tax-saving products like the Public Provident Fund or tax-saving Fixed Deposits come with extended lock in periods. PPF locks in for 15 years while tax-saving FDs lock in for five years. ELSS funds, on the other hand, have a shorter lock-in period of only three years. You can withdraw your funds earlier if you have urgent financial goals.

• Returns that beat inflation

Equity Linked Saving Scheme funds invest primarily in the stock exchange. They can therefore earn higher returns than traditional tax-saving options.

• Tax treatment

Section 80C allows you to save tax on investments of up to Rs. 1.5 lakh each year. Long Term Capital Gains, (LTCG), up to Rs. 1 lakh are exempted from tax. If your annual returns exceed Rs. If your annual returns exceed Rs. 1 lakh, you will be subject to LTCG tax at 10%. Despite this, ELSS is still a popular way to save taxes for Indian investors.




How to invest in Investment Schemes via FinSukh.com?

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KYC Required to Invest in Investment schemes

Know Your Customer, commonly referred to as KYC, enables banks and financial institutions to verify the identity of their customers. You only need to do this once as a first-time investor. A KYC form will include identity, address, financial status, occupation, and demographic information.



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NOTE: As this is a Govt. of India scheme, customers are advised to visit National Savings Institute website www.nsiindia.gov.in for latest instructions/ modification in the scheme.

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