Every year, Rajesh Sharma, 40 would reduce his tax liability by Rs. 50,000 by investing in an 8% ULIP fund. In addition to generating good returns, it provided him with the security of an insurance policy. This was until he met his friend Lovleen Mishra, who introduced him to mutual funds under the ELSS Scheme. It enabled her to earn a return between 10-12% every year while saving Rs. 45,000 in taxes.

Earn higher returns while saving taxes by investing in an ELSS Scheme. Make the smart choice!

What is an ELSS Scheme?

ELSS i.e Equity Linked Savings Scheme is a special tax-saving Mutual Fund.

Key Features:

• The funds come in with lock in period of 3 years.
• The amount invested in an ELSS fund can be also deductible as taxable income.

On completion of the lock-in period if the ELSS funds are sold for profit, they will not attract any capital gain tax. 

Always Remember

• Before making an investment in a ELSS Fund, always remember to make a thorough research of the

1. Fund manager’s investment approach
2. Fund portfolio
3. Associated expenses
4. Past performance of the fund.

The lock-in advantage

 The lock-in period of an ELSS fund is much lower as compared to a

• Public Provident Fund with 15 years lock in period.
• Fixed Deposits with a lock in period of 5 years.

Moreover the investment in an ESS will help defer the investment over the period of time, rather than taking on a one time burden. These advantages make ELSS is the clear winner here!

Takeaways

• In case you are an investor with a high risk taking appetite, ELSS is the best tax-saving instrument for you. Avoid investing in an ELSS Scheme if you are looking to make a lump-sum investment

• Always invest in a SIP to average the overall investment cost before making an ELSS investment.

Looking to Save Tax under 80C? Here is a platform to help you make right decision: Tax Saving via Guided Portfolios