Weekend Bytes

Make tax saving less ‘taxing*’ with HDFC ELSS Tax saver
Are you at your wits’ end trying to understand tax provisions, planning your tax deductions and filing returns? If you are, then you aren’t alone. You have esteemed company of Mr. Albert Einstein, the Nobel Prize winning physicist who developed the theory of relativity. once said that “The hardest thing to understand in the world is the Income Tax”.
While you (and Mr. Einstein, of course) can be excused for getting bogged down by the prospect of tax planning, one cannot run away from the fact that one has to pay taxes and if you have to pay them, you might as well make the most of tax provisions which reduce your tax burden. One such provision viz. Sec 80C allows for deduction currently up to Rs 1,50,000 p.a. towards life insurance premium, various eligible investments etc. from total taxable income.
While there is no dearth of avenues eligible u/s 80C, comparing their features can help you make a well -informed decision.

> Returns
ELSS returns being linked to equity markets have potential of being better compared to tax saving FDs, PPFs, NSC etc. which are debt products. Although, risk assumed would be higher in ELSS.
> Short lock-in period vis-à-vis other options
ELSS lock-in period of 3 Years is lower than most other 80C eligible instruments
> Flexibility
Unlike ULIPs, investment in ELSS is not a multi-year commitment.
An ideal way of investing in ELSS for 80C deduction would be through the SIP (Systematic Investment Plan) route. SIP in ELSS not only ensures that your 80C investments are staggered throughout the year but also shields you from market timing risk.
HDFC ELSS Tax saver, with a track record of more than 25 years, is one such ELSS which aims to provide dual benefit of capital appreciation and 80C deductions. Apart from HDFC ELSS Tax saver, investment in HDFC Retirement Savings Fund, which has a lock-in period of 5 years or till retirement age (whichever is earlier), is also eligible for deduction u/s 80C.
*The world ‘taxing’ means “something which needs a lot of thought or effort”. Although the origin of this word has nothing to do with taxation, the word aptly describes the tedious nature of tax compliance. Putting some thought and effort into it well in advance can spare you last minute hiccups.
Views expressed above are indicative and should not be construed as investment advice or as a substitute for financial planning. Due to the personal nature of investments, investors are advised to consult their financial advisors before investing in any scheme.

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