Tax saving & Long term Wealth creation can be two sides of the same coin when it comes to ELSS i.e. Equity Linked Saving Scheme. While there are several opportunities to help you save tax u/s 80C, ELSS also known as tax saving scheme is a one - stop solution for all your tax saving and wealth creation needs and comes with the lowest lock-in period of 3 years.
Why you should not wait till March 31, 2021
Effective from Feb 01, 2021, NAV (Net Asset Value) applicability for mutual funds have moved to realization based NAV. Which means to ensure you get the tax benefits on ELSS investments for the financial year 2020-21, you can’t wait till Mar 31, 2021 to make your investment. Moreover, as March 29, 2021 is a bank holiday in respect of festival Holi, investors need to submit the application form before Mar 25, 2021 3:00 p.m. cut off timing to avail benefit of 80 C deduction.
Let’s understand a bit more about ELSS and what are the benefits it provides over other tax saving instruments:
What are the 5 advantages of ELSS Scheme?
Twin benefit: One Fund, Twin benefit; ELSS = Tax Benefits + Potential Long Term Wealth Creation.
Cope better with inflation over the long term: This scheme gives you exposure to equity markets which has potential to provide risk adjusted returns commensurate with the market risk exposure, and helps cope with inflation over the long term.
Save tax u/s 80C: Investments upto Rs.1.5 lakh a year in ELSS are eligible for tax deduction benefits under section 80C of the Income Tax Act, 1961.
Lowest Lock-in: ELSS investment comes with a lock-in of only 3 years in the tax-saving category, making ELSS investments a relatively more liquid option. You can actually redeem your ELSS fund investment in just 3 years. This is the lowest when it comes to other tax-saving instruments. You have the option to redeem your ELSS units partially or fully after the lock in period of three years is complete.
(Note : The investments you make in NPS are locked in until the age of 60)
- Low Portfolio churn
ELSS generally has a low-portfolio churn due to its lock-in period of 3 years where the fund manager does not need to re-adjust the portfolio to meet frequent redemptions.
ELSS is a tax saving investment to achieve your long term goals such as child’s education or your retirement and complements your equity allocation to profit from the long term economic growth in India.
Do not miss the opportunity to save tax before the financial year ends and begin your journey towards building wealth.
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