Equity Linked Savings Scheme
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Equity-linked savings scheme popularly known as ELSS are close-ended,lock-in period of 3 years diversified equity schemes offered by mutual funds in India.[1][2] They offer tax benefits under the new Section 80C of Income Tax Act 1961.[3] ELSS can be invested using both SIP(Systematic Investment Plan) and lump sums investment options.[4][5][6] There is a 3 years lock-in period, and thus has better Liquidity compared to other options like NSC and Public Provident Fund.[7]
Comparison between ELSS and other tax-saving methods
The comparative between ELSS and popular other tax-saving options in India:[8]
| Investment | Returns | Lock-in period | Tax on Returns |
|---|---|---|---|
| 5-Year Bank Fixed Deposit | 6 to 7% | 5 years | Yes |
| Public Provident Fund (PPF) | 7 to 8% | 15 years | No |
| National Savings Certificate (NSC) | 7 to 8% | 5 years | Yes |
| National Pension System (NPS) | 8 to 10% | Till retirement | Partially Taxable |
| ELSS Funds | 15 to 18% | 3 years | Partially Taxable |
Over the last 5 years, the ELSS funds have given annualised returns of around 12-13%. (Wealth18.com)
- Save up to Rs. 46,350* in taxes each year
- Invest in a diversified equity fund
- Don’t have to choose between reducing tax and investing for the future
- You have the option to put money every month
See also
References
- ^ http://economictimes.indiatimes.com/mf/analysis/tax-saving-recycling-your-elss-investments-is-a-very-bad-idea/articleshow/56512440.cms
- ^ Five mistakes to avoid when investing in an ELSS fund
- ^ "Funds aimed at enabling investors to avail tax rebates under Section 80-C of the Income Tax Act".
- ^ "Investment in SIPs yields better returns than timing the market: Study".
- ^ "What's a mutual fund SIP?".
- ^ "Should you invest a lumpsum in ELSS?".
- ^ http://articles.economictimes.indiatimes.com/2013-02-18/news/37160319_1_equity-fund-lock-in-period-growth-option
- ^ ClearTax. "ELSS Funds - Invest in Best ELSS / Equity Linked Savings Scheme Funds". cleartax.in. Retrieved 4 November 2018.
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