Is ELSS better than FD?
Equity Linked Savings Schemes (ELSS) ELSS funds offer great tax benefits, and unlike FDs, the dividend earned on the investment will not be subject to tax deduction. ELSS funds have a comparatively shorter lock in period of 3 years, while tax saver FDs come with a lock-in period of 5 years.
What is ELSS and how it works?
Equity Linked Savings Scheme or ELSS Funds is an open-ended Equity Mutual Funds that help you save and provide an opportunity to grow money. When almost all equity funds restrain you from paying long-term capital gains tax of 10.4% up to an amount of Rs. 1 lakh, ELSS mutual funds offer tax benefit.
What is the benefit of ELSS?
Tax Savings Amount invested in an ELSS fund is available for a tax deduction to the extent of ₹150,000 for the current financial year under section 80C of the Income Tax Act. This is the only scheme which allows investors to save on tax while earning high returns from investment in equity funds.
Is ELSS safe investment?
ELSS funds have a lock-in period of 3 years, the shortest among all options eligible for tax saving under Section 80C. Public Provident Fund has the highest lock-in of 15 years whereas other options like Tax saving FDs, Life Insurance Policy and National Savings Certificate have lock-in periods ranging from 5-10 years.
Is ELSS income taxable?
An ELSS or equity-linked savings scheme is a tax-saving investment option under Section 80C of the Income Tax Act, 1961. These gains of up to Rs 1 lakh a year are made tax-free, and any gains above this limit attract a long-term capital gains tax at 10%.
How do I start ELSS?
To invest in an ELSS, an individual must be KYC compliant. The investment can be made by visiting the fund house’s branch office or the registrar office with a duly filled physical form along with a cheque. One can also start investing online via the fund house’s website or aggregators.
What is difference between ELSS and equity mutual fund?
ELSS funds have a lock-in period of three years. Whereas, the equity mutual funds, have no lock-in period. But, if you are looking for an investment option that gives you easy liquidity option, you can consider investing in equity mutual funds; you can pay the exit load, and redeem your investment at any time you want.
Which is better mutual fund or ELSS?
You cannot compare an ELSS with a mutual fund. An ELSS is also a mutual fund that offers tax deductions of up to Rs 1,50,000 a year under Section 80C of the Income Tax Act, 1961. The only difference between an ELSS and other mutual funds is that the later doesn’t offer tax benefits.
Is ELSS high risk?
ELSS funds invest primarily in equity and equity-related instruments. Hence, there are market risks associated with ELSS funds. However, the high risk-return ratio combined with the lock-in period helps even out the market fluctuations and works in favour of long-term investors.
Which is better ELSS or mutual fund?
What does ELSS stand for in mutual funds?
ELSS or Equity Linked Saving Scheme funds are tax saving mutual funds, in which the majority of the funds are invested in equity schemes. The investments in ELSS receive tax benefit under section 80C of the Income Tax Act. What is the lock-in period in ELSS Mutual Funds? ELSS Mutual Funds have a lock-in period of 3 years.
How does equity linked saving scheme ( ELSS ) work?
ELSS Mutual Fund As the name suggests, Equity Linked Saving Scheme or ELSS is a type of mutual fund scheme that primarily invests in the stock market or Equity. Investments of up to 1.5 Lac done in ELSS Mutual Funds are eligible for tax deduction under section 80C of the Income Tax Act.
Are there any tax benefits to investing in ELSS?
If one wants to balance out risk & return on their investment portfolio then ELSS is the best option. In addition to the upside of extraordinary returns, investments in ELSS are also eligible for tax deduction under section 80C.
Do you have to have SIP to invest in ELSS?
For a more efficient disciplined investment approach, you can also invest via Systematic Investment Plan (SIP) in ELSS, which requires periodic installments in the fund on predetermined date. However, it should be noted that each SIP installment remains locked-in for 3 years.