Financial Awareness Level
Why Invest in ELSS Funds?
Equity Linked Savings Scheme (ELSS) funds are one of the most preferred tax-saving investment options in India. They offer the dual benefit of wealth creation and tax deductions, making them an attractive choice for investors. If you’re looking to invest in ELSS funds, here’s everything you need to know.
What is an ELSS Fund?
An Equity Linked Savings Scheme (ELSS) is a type of equity mutual fund that primarily invests in stocks and equity-related instruments. ELSS funds come with a 3-year lock-in period, the shortest among tax-saving investment options under Section 80C of the Income Tax Act.
Benefits of Investment in ELSS Funds
1. Tax Savings Under Section 80C
Investments in ELSS funds qualify for tax deductions of up to ₹1.5 lakh per year under Section 80C.
2. High Return Potential
Since ELSS funds invest in equities, they have the potential to generate higher long-term returns compared to traditional tax-saving options like FDs and PPF.
3. Shortest Lock-in Period
ELSS funds have a lock-in period of only 3 years, whereas PPF has 15 years and tax-saving FDs have 5 years.
4. SIP or Lump Sum Investment
You can invest in ELSS online through a Systematic Investment Plan (SIP) or a lump sum. SIP investments help in rupee-cost averaging and disciplined investing.
5. No Upper Investment Limit
While the maximum tax benefit is ₹1.5 lakh per year, there is no upper cap on ELSS investments, allowing investors to allocate more for long-term wealth accumulation.
How to Invest in ELSS Online?
- Choose a suitable ELSS investment plan based on your risk profile.
- Visit an online mutual fund platform or the fund house’s website.
- Complete your KYC process (Aadhaar, PAN, and bank details required).
- Select the investment mode (SIP or lump sum).
- Start investing with as little as ₹500 per month in an ELSS SIP.
Conclusion
Investing in ELSS funds is an excellent way to achieve tax savings and long-term wealth creation. With their equity exposure, short lock-in period, and flexibility in investment, ELSS investment plans are ideal for investors looking for both tax efficiency and high returns. Start your journey today by choosing to invest in ELSS funds online and make the most of this tax-saving opportunity!
ELSS
For further details click the link - Association of Mutual Funds in India SEBI Classification of Mutual Fund - HDFC Mutual Fund
Disclaimer:
The information is for general purposes only and not an investment advice. Readers should seek professional advice before taking any investment related decisions.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
FAQ Section
Who should invest in ELSS funds?
Anyone looking to save taxes under Section 80C while aiming for higher returns can invest in ELSS. It is suitable for long-term investors with a moderate to high risk appetite.
Can I withdraw my ELSS investment before 3 years?
No, ELSS funds have a mandatory 3-year lock-in period. You can only redeem units after this period.
Is there any tax on ELSS returns?
Yes, ELSS returns are subject to Long-Term Capital Gains (LTCG) tax. Gains up to ₹1 lakh per financial year are tax-free, and any amount above this is taxed at 10% without indexation benefits.
How does ELSS compare with PPF and FDs?
Unlike PPF and FDs, which offer fixed returns, ELSS funds are market-linked, providing potential for higher returns. Additionally, ELSS has the shortest lock-in period (3 years) among tax-saving options under Section 80C.
Can I invest in ELSS via SIP?
Yes, you can invest in ELSS online through Systematic Investment Plans (SIPs), which allow you to invest small amounts regularly instead of a lump sum.</p>
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Disclaimer
An Investor Education And Awareness Initiative Visit https://www.hdfcfund.com/information/key-know-how to know more about the process to complete a one-time Know Your Customer (KYC) requirement to invest in Mutual Funds. Investors should only deal with registered Mutual Funds, details of which can be verified on the SEBI website (www.sebi.gov.in/intermediaries.html). For any queries, complaints & grievance redressal, investors may reach out to the AMCs and / or Investor Relations Officers. Additionally, investors may also lodge complaints directly with the AMCs. if they are not satisfied with the resolutions given by AMCs, they may raise complaint through the SCORES portal on https://scores.gov.in. SCORES portal facilitates investors to lodge complaint online with SEBI and subsequently view its status. In case the investor is not satisfied with the resolution of the complaints raised directly with the AMCs or through the SCORES portal, they may file any complaint on the Smart ODR on https://smartodr.in/login.
