Jan 01, 1970 3 min read

Save Tax At the Last Minute! Invest in the Best ELSS Funds

By reading this blog, you will come to know how you can plan your tax savings at the last minute with ELSS Mutual Funds.
March 31, the deadline to file tax returns, is coming soon and its time to make an effective plan to save on your taxes. Although many of us are almost done with the planning, if you are among the late comers, then here we have the best advice for you. It has been observed that the salaried taxpayers end up paying a higher amount of taxes than they actually need to pay. If you too are a salaried taxpayer and want to save on your taxes at the last minute, you have the best option right here.

ELSS, i.e., Equity Linked Saving Scheme which is among the various fund falling under the Equity asset class of mutual fund is the best alternative available to you at present. It is a mutual fund plan which provides tax exemption under Section 80C of Income Tax Act, 1961, in order to reduce the tax liability. It falls under the EEE model, according to which the investors gain the tax exemption benefit thrice:

  • One at the time of investing, when an amount of investment up to 1.5lac is fully deductible from the total taxable income. Accordingly, the investors gain the benefit of paying fewer taxes in the current year of investment.
  • Secondly, the investors are not liable to pay any tax on the amount which is being earned in the form of interest from ELSS investments. The interest amount is fully tax-free, and one can enjoy the benefit of the entire earnings.
  • Third is the case of capital gains, i.e., when ELSS investment are sold. The investors need not pay taxes on the capital gain earned on ELSS funds, and they are free to use the entire amount.

This way, the ELSS mutual funds provide the tax benefits in three ways and help in reducing the tax liability.

Reasons to Invest in ELSS Funds

Apart from the reasons above, ELSS schemes investments are beneficial in a number of ways. Among the various alternatives for tax savings, they are considered the best ones due to the following reasons:

1. 3 Years Lock-In Period:- As per the provisions of the Act, the investors need to make a long-term investment in equity stocks in order to gain tax-saving benefits under Section 80C. Thus, all the investment options which provide tax exemption to the investors under the same act, are long-term in nature. Among others, ELSS has the shortest maturity of three years. This means that the investors can redeem their money from ELSS funds after three years of earning considerable returns on the same.

2. Tax-Savings with Capital Growth:- As the investment by ELSS is made in the equity stocks of the companies, one can earn capital appreciation along with tax savings. The shares and stocks provide high growth of capital and help investors in attaining their financial goals. Thus, it is highly beneficial to invest in them to earn commendable returns in the future.

Hence, it can be concluded here that, those who are looking for last minute advice to save tax before March 31, 2017, must make a lump sum investment of a considerable amount up to Rs.1.5 lac to avail the tax benefit. This will help not only in reducing the tax liability but will lead your financial dreams to get accomplished. MySIPonline and its team will help you in making the right choice of fund for your portfolio, so you must get associated with them now!

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