ELSS could be a win-win; help you cut tax out-go and maximise returns

There are various opportunities that individuals can avail, to save tax u/s 80C of Income tax Act like Public Provident Fund, National Savings Certificate, etc.

When compared to these traditional tax savings instruments$, an Equity Linked Savings Scheme is more opportunistic for individuals, as it provides a shorter lock-in period of three years and potential for higher returns, which are exempt from taxes.

It gives an opportunity aimed at harnessing the benefits of investing in equity and also providing tax benefits.

Investment Philosophy

This fund has a lock-in period of 3 years, which gives the fund manager the flexibility to make strategic, long-term investments in a diversified portfolio. It comprises of a mix of large and medium sized stock, carefully chosen after intensive fundamental analysis and research, having potential of long-term capital appreciation and growth.

Key Benefits

  • Provide tax deduction upto the limits specified u/s 80C of the Income Tax Act, 1961 is eligible for deduction.
  • Shorter lock-in period of 3 years as compared to other traditional tax saving instruments
  • It offers a potential for a higher return and potential to earn tax-free dividend
  • Also, there is no tax on long term capital gains on redemptions done after lock in period

Traditional tax saving instruments may have implicit / explicit guarantee of Government of India or respective issuer for repayment of principal and interest. Partial or pre mature withdrawals are also allowed in some instruments. Investments in ELSS are subject to market risks and the NAV of units of ELSS may go up or down, depending on the factors and forces affecting the capital markets. Partial or pre mature withdrawals are not permitted in ELSS. Investors should read and understand risk factors before making an investment decision.

This product is suitable for investors who are seeking* :

  • Long term wealth creation solution
  • An Equity Linked Savings Scheme that aims to generate long term capital appreciation by primarily investing in equity and related securities

Benefits of investing in ELSS

Summing up

Thus, in a nutshell, ELSS funds can be considered as an ideal tool for tax saving and wealth creation. Nevertheless, investors must make the proper choice of schemes. Yes, they do not offer guaranteed returns like the vanilla fixed income products, but being market-linked, they offer investors an opportunity to earn higher returns, albeit involving some element of risk. You may consult your financial advisor for details.

Mutual Fund investments are subject to market risks, read all scheme related document carefully.

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