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Getting Tax Benefit From ELSS

Get tax benefit by investing in the Equity Linked Savings Schemes ( ELSS ). You can use this ELSS for wealth building purposes by continuing your investment after 3 years. Thanks to the twin advantage of Capital Appreciation and Tax benefits which ELSS provide as it inculcates a disciplinary form of investing for generating higher returns.

To start investing in ELSS, you can start from a Systematic Investment Plan(SIP)from as low as ₹ 500. There is no maximum limit on SIP. It depends on you of whatsoever amount you can park your money in such scheme. If you want to exit from ELSS scheme, you can do so by selling it after 3 years.

Along with tax benefits, ELSS offers you the following advantages:

  • A suitable avenue to grow your money by investing in the equity market
  • Long term capital gains obtained from these funds are tax free
  • 3-years lock-in period only
  • You can also select a Dividend Payout option, thereby realizing some potential gain during the lock-in period. However, dividend payment will be from NAV of the scheme which should fall to the extent of dividend payment. As dividends are based on the availability of the Surplus and approval from Trustees.
  • Investing through Systematic Investment Plan(SIP) for bringing discipline in your tax planning approach
  • Historically, better performance than Public Provident Funds and Fixed Deposits

Try to avoid one-time investments in ELSS instead break it down into a monthly and recurring mode of payments in order to practice discipline and reign better control of tax saving investments and future wealth building approach.

Let's check out by comparing your situation without tax saving alternative (ELSS) and with tax saving options as under :

Particulars Without ELSS/80 C Tax Saving InvestmentWith ELSS/80C Tax Saving Investment
Gross Total Income₹ 7,50,000₹ 7,50,000
Deductions under sec-80 CNil₹ 1,50,000
Total Income₹ 7,50,000₹ 6,00,000
Total Taxable Income₹ 77,250₹ 46,350
Tax SavedNil₹ 30,900

Note : Tax calculation is done for a male person less than 60 years in receipt of salaried income for the assessment year 2017-18.