In India, March is tax month - give or take! Saving taxes can be challenging for many working professionals. In this story, we will tell you all about a powerful tax-saving investment option, ELSS funds.
We will look at factual information and help you understand how an ELSS fund works, what it’s benefits and negatives are, along with how it can help you save tax while simultaneously creating wealth.
What Are ELSS Funds?
Equity Linked Savings Schemes (ELSS) funds invest in equity or stocks, as they are commonly known. Thus, ELSS funds fall under the equity mutual funds category.
ELSS funds offer an important benefit besides a lucrative return potential- they help you save tax. Under Section 80C of the Income Tax Act (1961), an investor can claim tax deductions up to ₹1,50,000 by investing in ELSS funds.
ELSS funds come with a lock-in period of 3 years. However, this is the shortest lock-in period of any tax saving investment option under Section 80C.
Benefits Of ELSS Funds
#1. Tax Exemption (up to ₹1,50,000)
As mentioned before, an investment of up to ₹1,50,000 in ELSS can help you save taxes under Section 80C. This simply means that up to ₹1,50,000 of your total taxable income will be exempt from taxes.
It's important to note that the principal