Equity Linked Saving Scheme (ELSS) is a type of mutual funds
which invest at least 80% of the portfolio in equity instruments. ELSS
Investments qualify for the tax benefits under section 80C of income tax act up
to maximum of Rs 1,50,000/-
ELSS Fund offers Tax Benefits on the investment because most
of the funds are utilised for the economic growth of the country. ELSS funds
will have a minimum lock in period of 3 Years. Investing in ELSS has given better returns compared with
other small savings instruments like Public Provident Fund (PPF), National
Savings Certificate (NSC) etc
Mentotax recommends to Invest in ELSS for the following
reasons:
# Save Tax:
Investing in ELSS funds can save tax up to Rs 46800 for
person in 30% Tax slab, Rs 31200 for assesse in 20% Tax Slab and Rs 7800 for
those who are in 5% Tax Slab.
# Create Wealth:
Elss funds help the investors to create wealth in long term
by capital appreciation of the amount invested. Equity has delivered better
returns compared to other asset classes over the years
# Short Lock In Period:
ELSS Funds have minimum lock in period of 3 Years. Compared
with other small savings instruments like Public Provident Fund (PPF) has got
15 Years.
# Invest Small:
Investors can invest as small as Rs 500/- in ELSS Fund and
no maximum cap on investments.
# Compounding Benefits:
ELSS fund delivers compounding benefits on the investment. It
is always recommended to invest as early as possible.
#Systematic Approach:
ELSS fund can be invested via Systematic Investment Plan,
Investing Regularly for the fixed sum of amount for Pre fixed Tenure. SIP gives
better rupee cost averaging.
# Diversification:
ELSS Funds invest in various sectors, Companies across the
equity segment. Investing in ELSS is always consider superior compared to
direct equity.
# Tax Free Gains:
Capital Gains Up to Rs 1,00,000/- is exempted from Long Term
Capital Gain Tax redeemed per financial Year.
# Inflation Beating Returns:
Inflation Is the general rise of Price levels. ELSS Funds
Outperformed inflation beating returns compared to other traditional investments
like Bank FD etc
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