• LEAP

ELSS: Equity Linked Savings Scheme

What is an ELSS fund?

Equity Linked Savings Scheme is a kind of mutual fund which is eligible for tax deductions under Section 80C of the Income Tax Ac. You can claim a tax rebate of up to Rs 1,50,000/year and save up to Rs. 46,800 per year. Most ELSS funds invest primarily in equities and some fixed-income securities. Large-cap stocks comprise a significant portion of the total fund allocation in ELSS funds.

Important points about ELSS funds?

The following are the main features of ELSS mutual funds:

  • Tax deductions of up to Rs 1,50,000

  • Lock-in period of 3 years

  • The double benefit of tax saving and wealth creation

Factors to consider before investing in ELSS

  • Lock-in period: The investment you make in ELSS will be locked in for three years, and the capital gains will be taxed at the LTCG rate. You will not be eligible for any redemption for three years.

  • Investment duration: Since ELSS allocates most of the portfolio to equities, 5-7 years is the ideal tenure for ELSS investments.

  • Returns: There are no guaranteed returns, and the returns depend on the market performance. Longer the duration, the higher the returns and lower the risk.

Top 3 ELSS funds to invest in

  • Axis Long Term Equity Fund

  • Mirae Asset Tax Saver Fund

  • DSP Tax Saver Fund

In the following article, we will discuss how to analyse and choose the most suitable mutual fund!

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