Income tax saving is one of the most searched keywords on the internet by the new salaried professionals who recently have started their career and aren’t aware of the reliable ways of saving the income tax without breaking any legal rule or going against the law and government.
And although the government has numerous schemes like the PPF, tax saving fixed deposits, there is one brilliant way that can help you save the taxes and at the same time helps you to enhance your financial stability. The way we are talking about here is the ELSS, which is a category of mutual fund investment and is being extremely popular among the young salaried persons and entrepreneurs who are willing to save money and tax at once.
In this article, we will focus on the topic that what is ELSS investment, and how it can help you achieve the best returns and how it can help you save your taxes. So, be with us and know more about the ELSS.
Tax benefits under section 80c
The ELSS works under the tax relaxation given to the income taxpayers who have investment goals. Under this section, you can get the tax relaxation up to 1.5 lakhs in total. And it is up to that how you utilize this limit to get the maximum benefits. You can either invest in the different schemes that provide the tax benefits under the said section or buy the ELSS of the full limit.
Things you need to know about ELSS before investing your money to it
Although ELSS is a great way to get returns and save income tax, there are a few things that you should consider while investing your hard-earned money to ELSS. We have listed three such points that are needed to be known to you as an investor. So, go through them and think before investing that whether this is the right choice for you, or not.
- They are under market risks
Like any other mutual funds’ scheme, the ELSS is also governed by the market values and ups and downs. Although they are much safer than the stock investment, you have to rely on the market conditions for the returns.
- Returns are not as reliable as the normal mutual fund schemes
As the ELSS is dedicated to those buyers who are after the tax saving and have a relatively lower risk than the mutual funds, you may not get as good returns as you would get on the stocks and mutual funds. So, be sure that you keep this point in mind before making the investment.
- They have a 3-year lock-in period
The mutual funds have relatively lower lock-in period than the ELSS but they are intended for the tax benefits. The ELSS has the minimum lock-in period in the segment of tax benefit schemes and thus is a perfect choice for the investors.
So, these were the three most important points that must be considered before purchasing the ELSS for yourself. So, think before you invest.
