ELSS helps you Save Tax
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What is ELSS?
Simply put, ELSS (Equity Linked Savings Scheme) is a type of a Mutual Fund which invests your money in Equity Instruments and allows you to reduce the income tax you are liable to pay. Here's more on how ELSS works.
When you work so hard through the year and do your best to provide for your family, why should you pay so much Income Tax. With ELSS, you can save up to ₹46,800* every year in taxes by investing ₹1.5 Lakhs as per Section 80C of the Income Tax Act, 1961. Apart from Saving Tax ELSS also has additional benefits.
You can even choose to invest more than ₹ 1.5 lakhs as ELSS gives you a great opportunity to create long-term wealth and achieve your life goals.
Did you know - ELSS is preferred by all types of investors from amateur to seasoned.
Don't forget to check our FAQs about ELSS . If you have more questions, we would love to address them for you.
How does ELSS work?
- You Invest in ELSS via Lumpsum (One-time Investment) or SIP (Systematic Investment Plan).
- A minimum of 80% of the total corpus is invested in Equity and Equity-related Instruments.
- Your investment is locked-in for a period of 3 years.
- You can now claim Tax exemption on the invested amount up to a maximum of ₹1.5 Lakhs under Section 80C of the Income Tax Act, 1961.
- This enables you to save up to ₹46,800* in Income Tax every year.
Investing in ELSS not only helps you Save Tax, but also gives you an opportunity to Build Wealth thanks to a Lock-in period of 3 years. Given that your money is invested in Equity, the timeline of 3 years enables a higher chance of creating wealth.
Why invest in ELSS?
Potential to Create Wealth
Investing in ELSS can be used to fulfill your Financial Goals. While Saving Tax you can also use ELSS to attain Goals like Retirement Planning, Children's Education, etc.
Chances of Better Returns
Since ELSS invests in equity, returns can be relatively higher than other Tax-Saving instruments.
Better Post-Tax Returns
Investment Growth (Long Term Capital Gains) from ELSS is Tax-free up to ₹1 Lakh per year and is Taxed only at 10% above ₹1 Lakh.
Shortest Lock-in**
ELSS has a lock-in period of 3 years. Compared to this other Tax-Saving instruments under 80C like FDs have 5 years lock-in and PPF has a 15 years maturity period.
Who can invest?
Niraj is in his first job at a Bangalore based IT firm. To save tax, he invests a small amount in ELSS via a monthly SIP.
Jignesh owns a distribution business in Lucknow. He has started investing every year in ELSS to save tax.
Divya is a social media influencer from Jaipur who has a lot of followers. She saves tax with ELSS via a monthly SIP.
Priyanka is a corporate lawyer in Gurgaon. She invests regularly in ELSS with an objective of wealth creation.
Here are some FAQs about ELSS
Does ELSS have a lock-in period?
ELSS has one of the shortest lock-in periods compared to other tax-saving instruments i.e. 3 years.
How can I invest in ELSS?
You can either invest in a lumpsum amount or start a monthly SIP to avail tax benefits during a particular financial year.
What is the right time to invest in ELSS?
There is no right or wrong time for investing in equity mutual funds. Don't try to time the market. The sooner you invest, the better!
Are the returns on ELSS taxable?
ELSS has a shorter lock-in period of three years. Thus, you will not be able to redeem your units before the completion of three years. Post redemption it will be taxable as Long-Term Capital Gain (LTCG). LTCG up to Rs.1 lakh is tax-free and LTCG over Rs.1 lakh is taxable at the rate of 10% without the benefit of indexation.