Plan your tax savings by investing in Equity Linked Saving Scheme


Mutual funds offer a simple way to get tax benefits. You have to invest in tax saving mutual funds to get tax benefits. Equity Linked Saving Scheme (ELSS) offer the dual benefit of tax savings and creating wealth. You can plan your tax savings by investing in ELSS.

What is Equity Linked Saving Scheme?

The Equity Linked Saving Scheme is an open ended equity mutual fund which gives you the opportunity to grow money as well as save tax. It invest in equity markets and and qualifies for tax exemption under the section 80C of the income tax act.

You can claim deduction up to the 1.5 lakhs from your gross total income in a financial year. It is more opportunistic to individuals as it has a short lock-in period of three years. This gives the fund manager enough flexibility to make long term investments in a diversified portfolio. It has the potential for higher returns which are exempt from taxes.

It consist of a mix of medium and large sized stocks that have the potential for long term capital gain and growth. The units of ELSS may go up or down depending on the factors affecting the capital market. Partial or premature withdrawals are not allowed in Equity Linked Saving Scheme.

Benefits of investing in ELSS

ELSS offers may benefits along with tax benefits. They are

  • You get an opportunity to grow money by investing in equity market and also get tax savings.
  • Long term capital gains are tax free.
  • The lock-in period is of three years only.
  • It allows you to invest through systematic investment plan thus allowing you to bring discipline to your tax savings.
  • You get regular returns even in the lock-in period with the Dividend Payout option.

It has the potential for higher returns and the potential to earn tax free dividends. There is no long term capital gain on redemptions done after the lock-in period.

ELSS is best suited for investors seeking long term wealth creation solution. It is also suitable for investors aiming to generate long term capital gain by investing in equity and related securities.

Financial advisor
ICICI Pru MF offers expert financial advisors who guide you to make sound investment decisions. They help you optimize your mutual fund investments. They give you the right advice and develop a plan that suits your investment objectives. You can consult your financial advisor to know about the best tax saving plan for 2017.

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