Mutual funds provide flexible investment option by allowing investing in SIP. There are 1000 of mutual funds available in market. In this, set of mutual funds are Tax saving mutual fund, also called Equity Linked Savings Scheme (ELSS. These funds are mutual fund schemes that invests in equity & equity related securities. Investment in ELSS mutual funds can be shown in section 80C for tax planning. Can we get tax benefit on mutual fund investments?
How much can we save by ELSS mutual fund:
Mutual fund tax benefits under Section 80C – Investments in Equity Linked Savings Schemes or ELSS mutual funds qualify for deduction from your taxable income under Section 80C of the Income Tax Act 1961. The maximum investment amount eligible for tax deduction under Section 80C, is Rs 1.5 lakhs. We can declare maximum 1.5 lakhs in section 80C. This 1.5 lakhs includes PF, insurance, tuition fees, ELSS mutual fund and few more. In old tax regime, by proper tax planning in section 80C, we can save ₹46,800. In long term, ELSS mutual funds give 2x Higher returns than FD / PPF
What is the lock-in period of ELSS Funds ?
Average returns around 15% in last 3 years, better than Fixed Deposit or PPF. ELSS mutual funds have minimum lock-in period in section 80C investment. Apart from tax planning,
ELSS mutual funds are best investment as well. It has a lock in period of 3 years only in case invested for Tax saving
What are the best Tax saving investment under Sec 80C:
Always select direct mutual fund with growth option. Do not invest in regular mutual funds which has higher fees.
- Axis Long Term Equity Growth Direct Plan
- Mirae Asset Tax Saver Growth Direct Plan
- UTI Long Term Equity Growth Direct Plan
- IDFC Tax Advantage Growth Direct Plan
- SBI Magnum Tax Gain Scheme Growth Direct Plan
- Aditya Birla Sun Life Tax Relief 96
Who should invest in ELSS Mutual funds?
Anyone who wants to claim tax deductions of up to Rs 1.5 lakh under Section 80C provisions in old tax regime. These mutual funds are equity-oriented, and they invest a minimum of 60% of their portfolio in equity and equity-linked instruments. Hence, it is essential to stay invested for at least three-five years to reap the best returns out of these funds.
How to start ELSS mutual fund investment?
- Apply and get PAN card
- Apply for Saving account cheque book
- Open account in any one of mutual fund aggregators such as PaisaBazaar,Kuvera, Zerodha Coin, PayTM Money, Groww, ClearFunds.
- Select any one of ELSS mutual fund.
- Select mode of investment( one time lumpsum or monthly SIP)
- Select monthly contribution( in case of SIP)
- Complete the form by filling the personal information.
It would take hardly 30 min to start your investment in mutual fund aggregator platform. Once invest submit the investment proof to your employer to claim in 80C declaration. Save maximum by planning your 80C investments. Happy Investing.
PayTM Money + 110 rupees, Mutual fund investment takes just 3 min.
Last Minute Tax Planning – 80C 1.5 Lakhs for Mutual funds as well.