Managing and saving tax effectively and efficiently is one of the critical parameters of our financial career. Excelling into this can resolve most of the financial issues of individuals. If you are the one who wishes to get adequate returns on your investments while also saving some penny on taxes, then regular mutual funds would not do the trick for you, here the critical role player is tax-free mutual funds. Through investment in tax-exempt mutual funds, you can specifically invest in Tax saver ELSS fund or Equity Linked Saving Scheme funds and save some bucks.
What is Tax Saver ELSS Funds?
ELSS is the category of mutual fund which helps in saving taxes. ELSS gives you tax benefit in binary form through capital appreciation as well as ELSS tax benefit comes under the equity category, which means more than 65% of the money is invested directly in equity.
Advantages of Tax saver ELSS Funds :
- Tax Exemption – The primary goal of a Tax saver ELSS fund is to help taxpayers save some bucks. With tax saving ELSS funds, an individual can claim tax benefits of ₹ 46,800* with annual investment up to ₹ 1.5lakh. Even though the Section 80C of Income-tax Act only allows exemption worth ₹1.5 lakhs, there are no limitations of investing in a tax-saving ELSS fund.
- Low lock-in – ELSS mutual funds have a lock-in period of 3 years. This is the shortest lock-in period among all the tax-saving instruments.
- Transparency – The portfolio in which the fund will be invested in ELSS Mutual Fund will be transparently available to all the investors.
- Full withdrawal – Once the invested amount completes 3 yrs of the lock-in period, you can withdraw 100% of it.
- Flexibility – An individual can invest in a tax saver ELSS fund via SIP or lump sum mode.
- Good return generator – The returns generated by tax saver ELSS funds are comparatively better than in competitor products.
Best ELSS funds in 2019:
For you to decide easily, we have curated the list of Top 5 Best ELSS funds in 2019 as per their return:
- Birla Sunlife Tax saver 96
- Axis long term equity
- DSP tax saver Fund
- Franklin India tax saver Fund
- Invesco India Tax plan
Best ELSS funds to invest in 2020:
Check out the list of Top 5 Best ELSS fund for 2020
- Tata India Tax saving Fund
- Axis long term Equity
- DSP Tax saver fund
- Motilal Long-term equity
- Mirae assets tax saver
Tax saver ELSS funds is an ideal instrument for those individuals who have a long list of investment horizon and a good understanding of the risk that comes with equity investments. Not only in terms of returns investment is handsomely rewarded in tax saving front. An ELSS tax benefit is highly sought after owing to the dual purpose that it serves.
*As per the present tax laws, eligible investors (individual/HUF) are entitled to a deduction from their gross income of the amount invested in Equity Linked Saving Scheme (ELSS) up to Rs.1.5 lakhs (along with other prescribed investments) under section 80C of the Income Tax Act, 1961. Tax savings of Rs. 46,800 mentioned above is calculated for the highest income tax slab. Investors are advised to consult his/her own Tax Consultant with respect to the specific amount of tax and other implications arising out of his/her participation in ELSS.