ELSS : Sec 80 C Tax Saving scheme

 

 

   Equity Linked Savings Scheme (ELSS) is a type of diversified equity mutual fund,with tax exemption under section 80C of the Income Tax Act.It offers the benefits of capital appreciation and tax saving. ELSS has a lock-in period of 3 years.

      ELSS investor receives the potential upside in Indian equity markets. No tax  will be deducted on the long-term capital gains from ELSS. Lock-in period in ELSS is shortest than other tax saving options.

TAX SAVING- COMPARISON

Parameter	PPF	NSC	ELSS
Lock in Period	15 years	6 years	3 years
Returns	(Compounded Annually) 8.80 % ^	(Compounded half-yearly) 8.60 to 8.90 % ^	Not assured. dividends/ returns
Minimum investments	Rs.500	Rs.100	Rs.500
Maximum investments	Rs.100,000	No limit*	No limit*
Amount eligible for deduction under Section 80C	Rs.100,000	Rs 1,00,000	Rs 1,00,000
Taxation for interest	Tax free	Taxable	Both Dividends and capital gain are tax free
Safety/ Rating	Highest	Highest	High Risk

  

   Investments of upto Rs.One lac per year is allowed to be claimed as income tax deduction.But,the main advantage of ELSS over other options are it’s short lock in period. Maturity period of National Savings Certificate is 6 years and Public Provident Fund is 15 years.

  Earning potential of ELSS is high as the equities perform well over a period of time.Investor can receive yield  during the lock-in period from the dividend option.Another advantage is by opting of Systematic Investment Plan in ELSS.It is suitable for all types of investors who are not risk averse and need tax planning. 

 

Disclaimer:  Investment in ELSS carry market risk and any investment decision needs to be taken only after reading the offer document.