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TAX TREATMENT AND BENEFITS OF INVESTING IN ELSS FUNDS

Smart and intelligent planning can help you save upto Rs 85,800# in a financial year depending on your tax bracket. The greater your income, the more tax you can save. Icicidirect.com brings you an easy way to invest in some of the most popular tax-saving options in just a few clicks to maximize your savings.

Grow your wealth and save up to Rs. 46,800 under Sec. 80C with top tax-saving mutual funds. ICICIdirect offers a wide range of ELSS funds with the lowest lock-in period of three years to help you earn high returns with high liquidity! Start investing today.

Reasons to Invest in ELSS Funds

  • Lock-in period of just 3 years, lowest among all other 80C investments
  • Equity market linked returns, thereby offering potential for higher returns than traditional tax saving products
  • Invest regularly with amount as low as Rs. 500 monthly via Systematic Investment Plan (SIP)
  • Benefit from compounding over time
  • Returns are not taxable up to Rs. 1 lakh a year. 10% tax on returns above that

Tax Treatment and Benefits of Investing in ELSS Funds

Equity Linked Savings Schemes or ELSS funds are tax-saving mutual funds, and one of the most popular methods of tax planning. These funds can potentially generate higher returns as compared to other tax savings instruments because the returns are linked to stock market performance. ELSS funds typically invest most of their corpus in equity. With ELSS, you can get an income deduction of up to Rs. 1.5 lakh in a financial year under Section 80C of the Income Tax Act, 1961. If you are in the highest income bracket, this translates into a tax saving of Rs. 46,800.

Reasons to Invest in ELSS Funds

Pay less buy more

Under Section 80C of the IT Act, you can avail deduction and reduce your taxable income by up to Rs. 1,50,000 per annum

Cashless trading

ELSS investments have lock in of 3 years only, lowest among all other 80C investments

Convert to delivery

If you belong to the highest tax-slab, and fully utilise Section 80C provisions, you can save up to Rs. 46,800 per annum by investing in ELSS Mutual Funds

Convert to delivery

Gains qualify for Long Term Capital Gains - Tax free up to ₹1 lakh, Just 1% beyond ₹1 lakh

Comparing ELSS with other 80C investments

ELSS Mutual Funds invest in equity markets and thus offer potentially higher returns in the long-term, when compared to other 80C investments.

Also, ELSS has the shortest lock-in period among all 80C investments. Comparatively, other 80C instruments have longer tenures and returns are linked to interest rates. Let’s compare the ELSS schemes with other 80C investments.

Investment Returns Lock-in period Tax on Returns
ELSS 12-14% 3 years Nil till Rs 1 lakh, 10% beyond 1 lakh
Public Provident Fund (PPF) 7-8% 15 years Tax-exempt
5- Year Bank Fixed Deposit 4-6% 5 years Yes
National Savings Certificate (NSC) 7-8% 5 years Yes
National Pension System (NPS) 8-10% Till retirement Lumpsum withdrawal of 60% is tax-free: 40% to be invested in annuity plan. The returns from the annuity plan are taxable

*The above table shows approximate return on investments, over the last five years

*ELSS is a market-linked investment instrument and carries risk

podcast

ELSS: Wealth creation with tax savings by Mr. Rohit Singhania, Co-Head Equities, DSP India

ELSS: Wealth creation with tax savings by Mr. Gaurab Parija, Head – Sales & Marketing, IDFC Asset Management Company

Podcast by Ms. Cheenu Gupta, Fund Manager, Canara Robeco Asset Management Company

Videos

Tax ELSS

Webinar with Mr. Suresh Sadgopan, Founder, Ladder 7 Financial Advisories

Tax ELSS

Webinar with Mr. Ajay Garg, Sr. Fund Manager, Birla Sun Life Asset Management Company Limited

Tax ELSS

Webinar with Vishal Kapoor, Chief Executive Officer, IDFC Asset Management Company

Tax ELSS

Webinar with Ms. Cheenu Gupta, Fund Manager, Canara Robeco Asset Management Company

Tax ELSS

Webinar with Mr. Jinesh Gopani, Head - Equity, Axis Mutual Fund

Tax ELSS

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