Skip to main content

ELSS and PPF for Tax Saving Option

 
Invest for Tax Saving Online


In the long run, these assets also create wealth as average yearly returns are higher than comparable assets
 
Two weeks from now, we would be entering the crucial January-February-March (JFM) months, the time when a large number of taxpayers rush to complete their investments which would lessen their tax burden for the current fis cal. Although ideally tax planning and tax-related investments should b done right from the be ginning of the financia year, but often people kee it pending for the majo part of the year and rush in to invest only when it becomes urgent during th last few months.

Financial planners an advisors suggest that tw popular and easy to un derstand products whic are also rewarding in lon term could be used to effi ciently meet the obliga tions for tax related in vestments which will lessen the tax burden of individual taxpayers These are equity linked savings schemes (ELSS) floated by mutual funds and the public provident fund (PPF), which is man aged by the government PPF has a 15-year lock-in from the year you start in vesting while ELSS has a three-year lock-in for each individual investment.

Depending upon the age of the investor, he advises them to invest in ELSS and PPF in a particular ration. If the tax payer is an young individual, I suggest 30% of the in vestible corpus to go into PPF and the balance 70% in ELSS. On the other hand, if the tax payer is a 50 year old individual, I suggest him to divide the total investment corpus equally. I usually follow the rule that says that the percentage of investment into equity should be 100 minus your age, and the balance into debt.

The advan tages of such a mix are manifold. For one, both of fers tax ad vantages under t h e cur rent taxa tion rules. Both the investments also help in building capital in the long run. In the long run, while the in vestment in PPF gives the stability to the port folio, ELSS helps in capital building. This also helps in asset allocation in a very efficient manner. And all the returns are tax free in the long run.

Even If done for the purpose of saving taxes, there should be a goal for which the investment is be ing made. In other words tax saving itself should never be an objective to in vest. Dalal, who also ad vises his clients on investment related matters, prefers a combination of ELSS and PPF for saving taxes, although he believes that in the last few years, since the time government linked the rate of returns in PPF to 10-year government bonds, PPF has become slightly less lucrative an investment than earlier.

ELSS has given an average annual return of 15%, which is very good. Even going forward, 15% CAGR (compounded annual growth rate) in ELSS is very much possible. On top of it, one could also enjoy the tax advantages. In the long run, equity usually outperforms debt and so the three year lock-in in ELSS for saving taxes is a blessings in disguise.

If someone is for the long term, ELSS should be the top priority. If the investor is conservative and risk averse in nature, then I would suggest him to invest more in PPF, because unlike equities this is not a volatile investment.

According to fund industry officials, a systematic investment plan (SIP) in an ELSS can take care of investors' need for regular and disciplined savings that also allows himher the option to lessen their tax burden. In addition, investing through ELSS also allows investors to build wealth over the long run and volatility, that is usually associated with equities, also reduces if one is willing to stay invested over the long run, that is 10, 15 or 20 years.

 
 
 

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1. BNP Paribas Long Term Equity Fund

2. Axis Tax Saver Fund

3. IDFC Tax Advantage (ELSS) Fund

4. ICICI Prudential Long Term Equity Fund

5. Religare Tax Plan

6. Franklin India TaxShield

7. DSP BlackRock Tax Saver Fund

8. Birla Sun Life Tax Relief 96

9. Reliance Tax Saver (ELSS) Fund

10. HDFC TaxSaver

Invest Rs 1,50,000 and Save Tax under Section 80C. Get Good Returns by Investing in ELSS Mutual Funds Online

Invest in Tax Saver Mutual Funds Online

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300  

Popular posts from this blog

Liquidity Adjustment Facility

Liquidity adjustment facility (LAF) is a money market tool used by the central bank of a country (in India it is the Reserve Bank of India ), to infuse funds into the country's banking system when liquidity dries up. Again, in case there is excess liquidity, the central bank uses some tools to help banks manage their surplus liquidity. Usually the RBI uses the repurchase facility (called Repo ) to give short-term loans to banks to meet their temporary liquidity shortage. On the other, hand RBI uses reverse repo facility to help banks park their excess liquidity with it. Banks usually use various securities, which are approved by the RBI, as collateral when they take money from the RBI to meet their short term liquidity requirement     Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015 1. ICICI Prudential Tax Plan 2. Reliance Tax Saver (ELSS) Fund 3. HDFC TaxSaver 4. DSP BlackRock Tax Saver Fund 5. Religare Tax Plan 6. Franklin India TaxShield 7. Canara...
Read more

NPS for Tax Saving

The NPS is a great way to save tax if you don't mind locking in your money till you retire. Till last year, the taxability of the NPS was a big issue. But last year's Budget changed the rules and made 40% of the corpus tax free. The PFRDA wants that the balance 60% to be exempt from tax as well. The emphasis is on increasing pension coverage. So, allowing EEE status (to NPS ) is our major demand (in the Budget NPS is especially useful for investors who may have exhausted the `1.5 lakh investment limit under Section 80C but want to save more.   Another way the NPS can cut tax is by rejigging the salary.If a company deposits up to 10% of the basic salary of an employee in the NPS under Section 80CCD(2d), the amount will be tax free. Turn to page 28 to see how much tax this can save. However, the take-home pay of the employee will come down. Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 10 Tax...
Read more

BHIM App

What is BHIM? BHIM stands for Bharat Interface for Money , which is an easy way of transferring money from one bank account to an other via a smartphone using the Unified Payments Interface (UPI) platform . It is an instant payments application meant for sending money as well as requesting for payments. How is it different from UPI? BHIM is no different than UPI. But in the case of BHIM, customers don't have to download mobile applications of multiple banks, instead a single BHIM app downloaded from Android Play Store is sufficient. Other than that, payments can be made through a virtual payments ID or through account number and IFS code, same as UPI. What you need to use BHIM? BHIM can be used across an droid smartphones with version 4.0 and above, also it will be made available on iPhones and Windows smartphones very soon. Further, for feature phone users they need to use the USSD feature by dial ing *99#. Why was the need for BHIM felt when UPI is already in place? With various...
Read more

NRI from Canada and US Invest in Mutual Funds in India

Investing in Indian mutual funds by NRIs from US and Canada As of December 2016, eight Indian fund houses were accepting investments from US/Canada-based NRIs Most of the Indian mutual fund houses have stopped accepting funds from US and Canada based NRIs due to regulatory restrictions. This is because the Foreign Account Tax Compliance Act (FATCA) makes it compulsory for all financial institutions in the world to report comprehensive details of all transactions involving US/Canada residents, (including non-resident Indians) to the US & Canada Government. Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund
Read more

NPS in Budget 2017

There is something to cheer for NPS subscribers in the fine print of the budget speech 2017. The budget has given clarification on those partial withdrawal norms  (which came into effect from June 2015) and brought parity between  salaried individuals and the self-employed in terms of tax benefits. The budget 2017 has clarified that NPS subscribers are allowed to make partial withdrawal of up to 25% from the contributed amount. This option is allowed for subscribers having contribution in account for at least 10 years. However, NPS subscribers can only withdraw for higher education or marriage of their children, construction or purchase of first house and treatment of specific ailments like cancer, kidney failure, paralysis etc. PFRDA has stipulated a gap of minimum five years between withdrawals. Also the maximum number of withdrawals allowed is three. However, there is no such limit if withdrawal is made for illness. Earlier, there was  confusion a...
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