What is an ELSS Fund?

An ELSS fund or an Equity Linked Saving Scheme is a scheme that makes it possible for people to save huge amounts of money on their tax payments while incurring profits on equities at the same time. While many benefits come with investing in ELSS funds, but such investments have to be carried out with utmost care to avert any long term risks and losses that these investments might be prone to.

For the same reason, it is a good idea to be well acquainted with What is an ELSS fund.

What is an ELSS Mutual Fund? Equity Linked Saving Scheme or ELSS fund is an open-ended saving scheme that allows you to save money, and with it, provides an opportunity for it to grow. While almost all other equity funds restrain you from paying a long term capital gains tax of 10.4% on an amount up to Rs. 1 Lakh, ELSS funds, on the other hand, provide tax benefits known as an ELSS tax deduction.

By investing in ELSS funds you can save up to an amount of Rs 1.5 lakh as per Section 80C of the Income Tax Act also known as the ELSS Income Tax Section. The only downturn of this scheme is that ELSS funds have a lock-in period of 3 years, this means every installment you make in an ELSS fund is subject to a 3-year lock-in period.

Why one should invest in an ELSS Mutual Fund? ELSS funds come with huge benefits for the investors, the most common reasons for investing in ELSS funds are given below:

• Tax benefits that are provided on investment in ELSS funds are the major reason for such investment. As per section 80C of the Income Tax Act 1951, you can avail tax benefits up to Rs 1.5 Lakh on investment in ELSS funds.

• It can build a habit of investing in long term investments. While other equity funds have a fixed lock-in period, ELSS funds require you to invest for a minimum of 3 years which you can also extend in return of further tax benefits on returns in the long run of things.

• With this longer investment options, you can allow your funds to grow for 3 years and then redeem the benefits. Because ELSS funds invest in equities, the chance of earning a higher return is also high.

• With the help of ELSS funds, you can also develop a habit of systematic saving for the long term. ELSS funds allow you to start an investment as low as Rs. 500 per month which means you can nurture your habit of investing from the early stages of life itself.

• Lastly, ELSS funds allow you to invest in the stock market. While a normal savings account allows you a maximum return of only 8%, with investment in ELSS funds, the range is a lot higher.

• ELSS funds to invest in below is a list of the best ELSS funds you can invest in:

• Axis Long Term Equity Funds

• Franklin India Tax Shield Fund

• ICICI Prudential Tax Plan

• Canara Robeco Equity Tax Saver Fund

An ELSS fund or an Equity Linked Saving Scheme is a scheme that makes it possible for people to save huge amounts of money on their tax payments. Visit Mutual Funds Sahi Hai for more information.

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