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Invest in ELSS (Tax Saving Mutual Funds) for saving ₹45,000 in Taxes

Equity Linked Saving Scheme Aka ELSS is a tax saving mutual fund where one can save upto Rs. 1.5 lakh in a financial year under Section 80C. It is an equity oriented investment. It has the shortest lock in period of 3 years with long term capital gains over 1 lakh being taxed at the rate of 10%. An ELSS investment can be individual’s first equity investment which would help them in saving taxes and as well as building wealth.
Why ELSS is the best Tax Saving Option

Lowest Lock-in of 3 Years

2x higher interest rates than FD/PPF

Returns Taxable @10% if gains are > ₹1 lakh

No maximum limit on investment

Option to invest Monthly (SIP)

Invest as low as Rs 1000 per month

Best option for long-term wealth

Will give inflation-beating returns

Comparison between ELSS & other Tax Saving Funds
Now there are many other savings schemes that help you build your wealth, such as FD, PPF and NSC to name a few. But the returns from these schemes are taxed. This is where Equity Linked Saving Scheme stands out with its dual-benefit – its returns are generally higher & partially taxable (Returns are not taxable until 31 March 2018. After 31 March 2018, returns will be taxable at a concessional rate of 10% if gains are greater than ₹1 lakh. This coupled with a mere lock-in period of 3 years is all the more reason for you to invest in ELSS now.
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 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
As a tax-paying citizen, the Section-80 of the Indian Tax Act allows you some breather – a deduction of up to Rs. 150,000 from your total annual income. This limit was enhanced in the 14-15 fiscal. Yet, many taxpayers find a major chunk of this getting consumed by mandatory deductions.

1.5 Lakh Investent in ELSS will double in 5 years

Lowest lock-in period of 3 years

Disclaimer: Mutual fund investments are subject to market risks. Please read the offer documents carefully before investing.

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Invest in Best ELSS Tax Saving Mutual Funds
Mutual Funds Rating 5Year AUM Category
Aditya Birla Sun Life Tax Relief 96 4 23.7% 5,032 Cr Equity
DSP BlackRock Tax Saver Fund 4 22.0% 3,905 Cr Equity
Axis Long Term Equity Fund 4 21.8% 16,161 Cr Equity
ICICI Prudential Long Term Equity Fund(Tax Saving) 4 18.5% 5,034 Cr Equity
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FAQs (Frequently asked Questions)
  • Are ELSS and Mutual Funds the same?
    ELSS and mutual funds both belong to the same family. The difference is that in an ELSS there is a lock in period of 3 years. But there’s nothing like a lock in period for a mutual fund.
  • Is ELSS Taxable?
    Long term capital gains over ₹1 lakh are taxable at 10% interest rate.
  • How can I invest in ELSS?
    You can either make a lump sum investment or a monthly investment(SIP) depending on your financials.
  • Who should invest in ELSS?
    ELSS is more suitable for people who are looking at long term investment with tax saving on their mind as it would provide good returns. People who are near retirement should be careful as it involves a higher risk compared to other schemes.
  • How much tax can I save through ELSS?
    According to Section 80C, a deduction upto Rs.1.5 lakh is allowed from your annual income.This 1.5 lakh may include investments like PF, ELSS and NPF.
  • Are ELSS investments risky?
    Yes. ELSS investments are risky as the returns are based on the equities which are volatile in nature. However, best performing funds have shown capabilities to generate high returns over a long period of time.This is something, which a PPF and FD fail to achieve.
  • Should I change my scheme after the lock in period?
    It is advised not to jump between schemes after the lock in period as a long term investment like 5-7 years in a single scheme would generate more returns. Since Equity Linked Saving Scheme depends on the equity market, it is hard to predict the returns. If your funds are still underperforming, while the market is blooming you may consider to change your scheme.