Elss Mutual Funds: Top 5 Reasons to Invest in Equity Linked Savings Plans
ELSS UCITS: Equity-linked savings plans are tax-saving mutual funds, which help an investor fight the growth of inflation over the long term. This tax savings plan is a three-year lock-in mutual fund with tax advantage under Section 80C of the Income Tax Act. Like any other equity mutual fund, an investor can invest in ELSS mutual funds in SIP mode with a minimum monthly SIP of ₹500.
Speaking on ELSS Mutual Funds, Sujit Bangar, Founder of Taxbuddy.com, said, “ELSS Mutual Fund is a good instrument option for equity investors who want to save tax and grow their wealth in tandem.This is a tax saving mutual fund investment vehicle the investor can claim tax exemption under Section 80C up to ₹Investment of 1.5 lakh in one financial year.”
Sujit Bangar of Taxbuddy.com listed the following 5 reasons that make these tax-saving mutual funds a good investment option for someone earning:
1]Three-year blocking: It comes with a three-year lock-up. So, automatically, you stay invested longer to get good returns.
2]Direct funds option: Like all equity mutual funds, ELSS mutual funds also offer a direct fund option to an investor. With a lower expense ration, these mutual funds allow maximum investment as the expenses in these mutual funds are very low.
3]Exposure to equity investments: “ELSS is a good way to get exposure to the equity market. I think it’s the first step towards building up equity as an asset class in your portfolio,” said Sujit Bangar.
4]Provision for tax-exempt income: The gain you earn on ELSS is tax free to the extent of Rs. 1 lakh in one year. If the gain exceeds more than one year, the gains would be taxed at 10 percent.
5]SIP Options: ELSS can be started with a monthly SIP as low as ₹500. So it’s easy to get into the habit of saving.