Equity-Linked Savings Schemes (ELSS) are tax-saving mutual funds that offer dual benefits of tax savings and wealth creation. Here's everything you need to know about ELSS funds.
What are ELSS Funds?
ELSS funds are equity-oriented mutual funds that qualify for tax deduction under Section 80C of the Income Tax Act. They have a mandatory lock-in period of 3 years.
Key Features of ELSS
- Tax deduction up to ₹1.5 lakh under Section 80C
- Minimum lock-in period of 3 years
- Potential for higher returns through equity exposure
- Can invest through SIP or lump sum
- Long-term capital gains tax benefits
Benefits of Investing in ELSS
- Tax savings: Save up to ₹46,800 in taxes (for highest tax bracket)
- Wealth creation: Equity exposure for long-term growth
- Disciplined investing: SIP option helps in regular savings
- Flexibility: Can invest anytime during the financial year
How to Invest in ELSS
- Complete KYC if not already done
- Choose an ELSS fund based on your risk profile
- Invest through SIP or lump sum
- Claim tax deduction in your ITR
Conclusion
ELSS funds are an excellent option for tax-saving while building long-term wealth. Start investing early in the financial year to maximize benefits.
