Top ELSS Mutual Fund: There are a variety of investment options available for tax saving. Under Section 80C of the Income Tax Act, 1961, you can claim tax deductions up to Rs 1.5 lakh. Under this section, many investment options including PPF get the benefit of tax exemption. However, ELSS mutual funds have the shortest lock-in period. Many people believe that ELSS mutual funds are better only for tax saving but it would be wrong to believe that there are some schemes which have given returns of up to 20 per cent to investors in five years.
ELSS Mutual Funds are such tax saving funds under which one can invest in equity and equity oriented securities. Some part of the investors’ capital is also invested in debt instruments. Who should do this?
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Up to 20% returns to investors in five years
Investing in ELSS funds has given investors up to 20 per cent returns in five years.
They should invest in ELSS Mutual Funds
- Any individual or HUF looking for investment options to save tax which can give better returns can invest in this.
- Only those people should invest in it who want to maintain their investment for at least three years. It has a lock-in period of three years on investment.
- If the money invested in this is also invested in equity, then it is better for those people who can take the risk related to the market.
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Indexation is not available on ELSS
ELSS Mutual Funds are a category of Equity Funds i.e. tax on it will be same as Equity Funds. The dividends paid by these funds will be added to your income and calculated as per the slab tax. Since it has a lock-in of three years, there is no short term capital gain. No tax is payable on long-term capital gains up to Rs 1 lakh from this fund and gains above that are taxed at the rate of 10 per cent. Investors do not get any benefit of indexation.
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