Unlike other instruments like PPF, NSC, and Long-term
deposits, an ELSS is a long-term wealth creator due to consistent equity
exposure. Equity investors are usually more cautious about losing money in the
market. Investors who are smart enough are cautious about saving money and
investing it from a longer-term perspective. ELSS is a kind of mutual fund
scheme that invests a majority of its corpus in an equity-related product.
ü
Tax benefit- Your returns form
ELSS become tax-free. Indian government provides the tax rebate for the
equity-linked saving scheme (ELSS) u/s 80C of Income Tax Act 1961. You can
invest into ELSS and deduct up to Rs 150000 from your taxable to effectively
reduce your tax liability.
ü
Lock in a period- Good
mutual fund portfolios are constructed for long-term investment. ELSS funds are
locked for at least 3yrs. This inculcates a good habit to stay invested for a
longer period.
ü
Ride the long-term value growth-
The lock-in period for ELSS is 3 yrs you can the continuous growth of your fund
for longer or redeem after 3yrs. But since these funds invest your fund in
equity you own greater chances of higher returns with tax exemption.
ü
Inbuilt saving habit- ELSS scheme
allow you to invest systematically with as low as Rs 500/month and slowly and
gradually your savings into your investments and the best part of ELSS will be
exempted from your tax returns.
ü
Opportunity to invest in equity while
saving- ELSS allows you the
benefit of equity mutual fund schemes ride the growth cycle of stocks in your
ELSS portfolio. In rising economy like India, a good portfolio with quality
stocks may reap higher returns.
No comments:
Post a Comment