ELSS – An ideal Instrument for Tax Saving

wealthfundIf you are doing financial planning, then you should know that under section 8Oc of Income Tax Act, you can save a considerable amount from the taxable income. Planning your taxes is an integral part of your financial planning. One of the most opted investment plans under section 8Oc is ELSS or Equity Linked Savings Scheme. Investing in ELSS, not just allows investors to gain tax benefits but also earn capital appreciation.

ELSS- What are its significant features?

In ELSS majority of the fund corpus is invested in equity-linked products, where the returns depend on the Equity market performance. This type of mutual fund comes with a minimum lock in period of 3 years. The lock in period starts from the date of investment. Investors can withdraw the funds any time after 3 years of investment. The returns in ELSS are tax free. The fund house takes a small amount of exit load, when the investor withdraws the amount by selling the unit.

When it comes to lock-in period, investing in ELSS comes as a better option in comparison to FDs and even PPF. Best of all, investor can start investing through SIP or systematic investment plans, which enables the investor to start investing with as less as Rs. 500. In addition, where ELSS pose higher risk than RD and PPF, it also allows investor to earn higher returns on investments.
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