{"id":7528,"date":"2020-05-08T16:11:09","date_gmt":"2020-05-08T10:41:09","guid":{"rendered":"https:\/\/www.fintoo.in\/blog\/?p=7528"},"modified":"2021-03-30T15:58:02","modified_gmt":"2021-03-30T10:28:02","slug":"equity-linked-saving-scheme-for-saving-tax","status":"publish","type":"post","link":"https:\/\/blog.fintoo.in\/blog\/equity-linked-saving-scheme-for-saving-tax\/","title":{"rendered":"Equity Linked Saving Scheme For Saving Tax"},"content":{"rendered":"\n

The finance minister Nirmala Sitharaman had announced that the deadline for investing in tax-saving instruments for the financial year 2019-20 has been pushed to 30th june 2020. <\/p>\n\n\n\n

The usual deadline was March 31. <\/p>\n\n\n\n

This move was taken as the entire country is in lockdown and it has been difficult to make last-minute tax investments. <\/p>\n\n\n\n

If you have already invested for FY 2019-20 then you can invest to save tax for FY 20-21.<\/p>\n\n\n\n

So are you looking for a tool to save tax? <\/p>\n\n\n\n

Are you a risk taker? <\/p>\n\n\n\n

Do you want to achieve a higher corpus? <\/p>\n\n\n\n

If your answer is yes in all the three cases, then Equity Linked Saving Scheme is the right fund for you. It qualifies for all the above questions.\u00a0<\/p>\n\n\n\n

ELSS (Equity Linked Saving Scheme) is a diversified Mutual Fund and as the name suggests, majority of the fund is invested in equities. It is a saving scheme too, as it helps in saving your taxes, this deduction is available or can be claimed under section 80C. It appreciates one’s capital as well as saves taxes. <\/p>\n\n\n\n

Let us now look at the tax benefits of this fund.<\/strong> <\/h2>\n\n\n\n

Tax planning plays a very crucial part in Financial Planning. <\/p>\n\n\n\n

Tax is where you can save most of your money from getting deducted. As mentioned earlier, this deduction is allowed under section 80C. <\/p>\n\n\n\n

However, to avail this benefit, you have to keep the fund for a lock in of 3 years. For example, If I invest in an ELSS fund, I cannot touch that fund for 3 years. <\/p>\n\n\n\n

It is different in the case of a person investing through SIP (Systematic Investment Planning). Since he is investing every month, he can withdraw the whole amount after 6 years or the other option available with him is to invest through SIP for 3 years and withdraw monthly for the next 3 years. <\/p>\n\n\n\n

So all the monthly investments will have completed the 3 years lock in period. The maximum amount that you can claim under section 80C is Rs. 150000\/-. <\/p>\n\n\n\n

The added advantage is the gain realised upto Rs.1,00,000 in a financial year is also tax free. Any long term capital gain over 1 lakh attracts the tax of only 10%. <\/p>\n\n\n\n

That is why it is considered as one of the most tax efficient investments.
<\/p>\n\n\n\n

\"How<\/figure>\n\n\n\n

There are 2 types of Equity Linked Saving Scheme funds:<\/strong><\/h2>\n\n\n\n
  1. Growth Funds:<\/strong>This is simple, You invest a lump sum and withdraw the whole amount after maturity, If it’s through SIP, then make a monthly withdrawal after 3 years. So each SIP, will complete 3 years.<\/li>
  2. Dividend Scheme: <\/strong>Under this option, you receive regular dividend, as and when the company declares. <\/li><\/ol>\n\n\n\n

    Must Read :<\/strong> Tax Saving opportunity Extended Till 30th June \u2013 Where To Invest?<\/a><\/p>\n\n\n\n

    Now we talk about, what to look for when choosing an ELSS fund:<\/strong><\/h2>\n\n\n\n