Skip to main content

Tax Saving Using Equity Linked Saving Scheme ( ELSS )

Invest Mutual Funds Online

Download Mutual Fund Application Forms
 
It's the last quarter of the year and the Tax Man is eagerly waiting for his share. All the earning people are busy with calculations and research to find out which is the best tax saving option. We are witnessing a flood of tax saving bonds in this season and they are selling like glittering gold now a day. Even though there is a tax saving on initial investment of 20000 just because it's over and above the investment cap of 100000 people are flocking the issues.

Is there any instrument which provides an opportunity of capital appreciation together with Tax saving? We will be discussing one such instrument called Equity Linked Saving Scheme (ELSS) in this article.

What is ELSS?


Equity linked savings schemes (ELSS) are equity-oriented mutual fund schemes with an added feature of tax saving under different sections of the Income Tax Act together with the regular features of a mutual fund. Investments up to 1 lakh in ELSS funds are eligible for deduction from taxable income.

What are the Key Features?


These are equity oriented mutual fund schemes where asset allocation towards equities can go in the range of 80 to 100%. As the allocation is tilted toward high return assets like equity, the main objective of such funds is capital appreciation.

What is the Tax Benefit attached to ELSS?


When you invest in ELSS you are eligible for tax benefits under various sections of income tax act. The most important benefit is, investment up to a maximum of 1 lakh is eligible as deduction from taxable income under section 80 C. Capital gains which you get from the investment on redemption are tax-free under section 10(38). While holding the scheme the income you receive in the form of dividend is tax free under section 10(35) of income tax act.

Investment Rationale


Although ELSS has a lock in period of three years, it's advisable to invest in this scheme as the lock in period is still smaller than other tax
saving schemes like PPF and NSC. ELSS also provides an opportunity of capital appreciation if market performs well. There is absolutely no scope of capital appreciation in case of PPF and NSC schemes above the agreed interest rate. Here, the lock in period of 3 years favors you as most of the allocation is towards equities.

Equities traditionally are considered as long term investment options and long term investors generally get above normal returns. The lock in period of three years keeps the temptation of selling your holding prematurely at bay. This restricting feature should be seen as blessing in disguise which is ultimately going to reward you in future. Together with this, your return percentage also gets a nice boost in the form of Tax savings. If you are not market risk averse and ready to take a little bit of risk investment, ELSS is recommended.

By investing in ELSS, you also save the time and effort of researching the stock market together with enjoying the above average returns.
 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Birla SunLife Manufacturing Equity Fund

The Make in India program was launched by Prime Minister Naredra Modi in September 2014 as part of a wider set of nation-building initiatives. It was devised to transform India into a global design and manufacturing hub. The primary motive of the campaign is to encourage multinational as well domestic companies to manufacture their products in India. This would create more job opportunities, bring high-quality standards and attract capital along with technological investment to bring more foreign direct investment (FDI) in the country.   Why India as the next manufacturing destination?   The rising demand in India along with the multinational's desire to diversify their production to include low-cost plants in countries other than China, can help India's manufacturing sector to grow and create millions of jobs. In the words of our Honourable Prime Minister- Mr. Narendra Modi, India offers the 3 'Ds' for business to thrive— democracy,...
Read more

Total Returns Index brings out real Equity Funds Performers

From February, equity mutual funds have to change their benchmarks to account for dividend payments. Until now, funds used price-based benchmarks alone. TRI or total return indices assume that dividend payouts are reinvested back into the index. What this does is lift the overall index returns, because dividends get compounded. For example, the Sensex TRI index will consider dividend payouts of its constituent companies while the Nifty50 TRI index will consider dividends of its constituents. Using TRI indices as benchmarks comes on the argument that an equity funds earn dividends on the stocks in its portfolio, which they use to buy more stocks. Therefore, using an index that also considers dividend reinvestment would be a more appropriate benchmark. Shrinking outperformance With a stiffer benchmark, it is obvious that the margin by which an equity fund outperforms the benchmark would shrink. Rolling one-year returns from 2013 onwards, the average margin by which largecap funds out...
Read more

Stock Review: Havells

HAVELLS India's stock performance has been muted in the past three months, in line with the weak broader market. But, given the turnaround in its overseas subsidiary and the launch of new products in its consumer durable business, the company's stock may undergo a re-rating.    Havells is India's leading consumer electrical goods company, with consolidated sales of . 5,527 crore in the past four quarters. Its wholly-owned subsidiary Sylvania, which makes lighting and fixtures, has established brands in European, Latin American and Asian markets. Sylvania repre sented nearly half of the company's consolidated revenues in the first half of FY11.    Sylvania's poor financials hit Havells' consolidated performance in FY10. But, this has changed in the cur rent fiscal. Havells has reduced fixed costs of Sylvania by exiting from unprofitable businesses and outsourcing manufacturing to low-cost locations such as India and China. In the September 2010 quarter, Sylv...
Read more

Kisan Vikas Patra - KVP

  Kisan Vikas Patra (KVP) First launched in 1988, the Kisan Vikas Patra (KVP) is one of the premier and popular saving scheme offering from the Indian Postal Department. This product has had a very chequered history- initially successful, deemed a product that could be misused and thus terminated in 2011, followed by a triumphant return to prominence and popular consumption in 2014. The salient features of KVP are as follows- The grand USP- Money invested by the applicant doubles in 100 months (8 years, 4 months). KVPs are available in the following denominations- Rs.1000, Rs.5000, Rs.10,000 and Rs.50,000. The minimum purchase value for the KVP is Rs.1000. There is no maximum limit. KVPs are available at all departmental post offices across India. These certificates can be prematurely encashed after 2 ½ years from the point of issue. KVPs can be transferred from one individual to another and from one post office to another. ----------------------------------------------------- Inve...
Read more

Health for Wealth - How to buy Health Insurance ?

Tax Saving Mutual Funds Online Current open Infra Bond Application form   HEALTH insurance is a relatively new phenomenon in India. Hence, it is not on the top of the mind for most people to make a conscious commitment towards health insurance. However, it is imperative for each one of us to plan for better health for our families and ourselves. There's no better way than to start with making health your top priority this year. So, your health insurance resolution charter would look something like: ■ Invest in health for wealth: Timely investment in health insurance can help build a security net and hedge sudden dilution of another financial asset class in the event of a health emergency, making it imperative to opt for a comprehensive health insurance plan. ■ Buy a comprehensive health cover that fu lfills your health needs for life: Buy a personal health insurance cover even if you have an employee cover because 'employer provided' health insuranc...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now