ELSS is an acronym for Equity Linked Savings Scheme, and it is a type of mutual fund that offers tax exemption under Section 80C of the Income Tax Act in India. ELSS funds come with a 3-year lock-in period, which means you cannot reclaim your ELSS stocks before three years from the date of investment.
Keep reading as we discuss the ELSS tax exemption and other benefits of investing in ELSS funds.
Benefits of Investing in ELSS Funds
There are numerous benefits of investing in ELSS funds. Each ELSS fund has different features and benefits that can help investors capitalise on their investments.
ELSS Tax Exemption:
By investing in an ELSS fund this fiscal year, you can take advantage of a ₹150,000 tax deduction as per section 80C of the Income Tax Act. With such great returns on equity investments and remarkable tax benefits, there is no better scheme to invest your money than ELSS fund!
Lower Tax on Gains:
ELSS funds also offer investors a lower tax rate on gains than other equity mutual funds. ELSS fund investments are subject to a 10% Long-Term Capital Gains (LTCG) Tax, while other equity funds are subject to a 15% LTCG Tax after one year of investment.
Compact Lock-in Period:
ELSS funds come with the shortest lock-in period among all 80C options, making it more attractive for those looking for quick returns. A 3-year lock-in period ensures your money is locked away from regular market volatility, ensuring protection and higher returns in the long run!
The Benefit of Compounding:
The ELSS fund offers the advantage of compounding, which helps investors get higher returns over a period of time. ELSS funds are ideal for long-term investments as the power of compounding can significantly increase your wealth in the future!
SIP Option Available:
Investors can opt for the ELSS Systematic Investment Plan (SIP) option, which allows them to start investing with low amounts and gradually increase their contributions over time. An ELSS SIP also helps investors average their purchase costs, thus reducing volatility risk and improving long-term returns.
ELSS funds offer investors significantly higher returns of 15-20% compared to other tax-saving options such as PPF and FD, which typically provide only 7-10%. With the additional benefit of compounding over a 3-year period, ELSS allows you to maximise your savings while also growing your money. Investing in an ELSS fund is one of the most beneficial ways to save on taxes with maximum return potential.
The Bottom Line
To get maximum return potential while saving taxes this fiscal year, explore the ELSS option on Shoonya by Finvasia. By investing in an ELSS fund on this platform, you can benefit from lifetime zero brokerage, tax savings, maximum return potential and wealth creation. Don’t miss out on this beneficial investment opportunity.