What is an ELSS mutual fund?
ELSS tax benefits, returns and more
The tax fever is back to haunt investors. While most Indians prefer traditional instruments that offer fixed returns, Equity Linked Savings Scheme (ELSS) ability to create wealth over the long run; giving tax advantage. Most importantly, irrespective of the asset class investor choose, they should comprehend that taxation plays an integral role in overall financial planning; hence, the activity should be carried throughout the year, and not towards the end of the fiscal. Thus one can start looking at investing in ELSS scheme through SIP and avail tax benefit up to Rs.1.5 lakhs for a year as per the current tax laws.
Mutual funds, offering ELSS, predominantly invest in a diversified portfolio of stocks. Investors, choosing the dividend option, enjoy tax-free dividends and need not pay the long-term capital gains tax when they sell units. The minimum lock-in period of three years is the only caveat for investors to claim tax rebates.