Equity Linked Saving Scheme (ELSS) - best tax saving Mutual Fund in India

Which is the best tax saving Mutual Fund in India? The answer to your question would be ELSS. That is because Equity Linked Saving Scheme (ELSS) offers dual advantages. That is because Equity Linked Saving Scheme (ELSS) offers dual advantages.

It can help you save tax as well as convey the capability of growing your wealth in the long run. The fund allocates its assets significantly in equity and can help you in retirement planning. Since the Fund is equity-linked for a longer time span, it has the potential for generating more significant yields.

Allow us to consider some of the vital features of ELSS.

Taxation

Investments in ELSS can be deducted from the taxable income to the degree of the passable limits u/s 80C of the Income Tax Act. Henceforth an ELSS can be used for tax planning. The dividend created by the Scheme and the maturity proceeds is subject to taxation.

(Also Read: Exchange Traded Funds)

Method of Investment

An investor enjoys the adaptability of purchasing ELSS units either by making a lump sum investment or by means of a Systematic Investment Plan (SIP). Be that as it may, arranging a huge investment amount up to ₹150,000 at one go can be challenging. The SIP approach can help you normal your buying cost per unit.

With SIP, you can choose to invest ₹12,500 consistently and save up to ₹46,800 in taxes by taking tax benefits of investments of up to ₹1,50,000, according to Section 80C of the Income Tax Act. Regular investments in ELSS consistently can help you in cost averaging after some time regardless of market levels.

Lock-In Period

When contrasted with other market-linked tax-saving options, ELSS offers you the benefit of the lowest lock-in period of three years. Nonetheless, when you invest in ELSS through SIP, you can withdraw money three years from the date of portion of the units of every installment. This means you can withdraw your whole money from the ELSS scheme after the last SIP installment has finished three years.

Types of Funds

ELSS offers Growth as well as Dividend Option. Under the Growth Option, you get a lump sum amount on maturity. Then again, under the Dividend Option, you get dividends when they are announced by the Fund. The Growth alternative is advisable for long-term investments supported with the intention of wealth accumulation.

Thus, you can settle on an ELSS that aids tax planning as well as the making of a corpus throughout some stretch of time.

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