Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TDS :: empanelment :: cpt :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES :: VAT Audit :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4%
 
 
Direct Tax »
 CBDT to honour honest taxpayers
 Startups in the docks over marked down valuation tax as March 31 nears
 CBDT asks taxman to make all out efforts to recover arrears
 CBDT chief prods taxmen to buck up, meet recovery target
 CBDT to hold review meeting on PMGKY, tax collection on Mar 17
 Monitor tax collection to meet target by Mar 31: CBDT to taxman
 File prosecution cases against shell companies: CBDT to taxmen
 Threefold jump in prosecution against tax offenders
 Income Tax department raises queries on suspicious bank account deposits post demonetisation
 Govt’s direct tax collections likely to miss budget targets for FY17
 Direct tax collections show 10.7 per cent rise up to Feb: CBDT

How can ELSS Mutual funds grow your money & save tax too
March, 28th 2014

There are various tax saving investment options where an individual can save tax u/s 80C of Income Tax Act. However, all such investment options come with fixed returns. One of the best ways to grow your money along with saving tax is to invest in Equity Linked Saving Scheme (ELSS) Mutual Funds in India.

What are Equity Linked Saving Scheme (ELSS) Mutual funds?
ELSS mutual funds in simple term are mutual fund schemes that invests 65% in equity related instruments that are notified to avail tax benefits. Investment in such ELSS MFs would provide tax benefit to investors u/s 80C, which is capped to a maximum of Rs 1 Lakh.

How do you benefit from ELSS Mutual funds?
There are various ways you would benefit from ELSS mutual funds.

1) ELSS mutual funds help you to grow money: Since ELSS mutual funds invests in equity related instruments, these schemes would help you to grow your money when the stock market grows over a period of time.

2) Save tax u/s 80C up to Rs 1 Lakh: By investment in ELSS mutual funds, you are eligible for tax exemption up to Rs 1 Lakh u/s 80C. If you have not utilized 80C fully, this is a good opportunity to invest in ELSS funds.

3) Lock-in period of 3 years: ELSS mutual funds come with lock-in period of 3 years. Generally, investors would get tempted to take out the money from any investment option as soon as they get some good returns. They would not wait for long term to enjoy long term benefits. Since ELSS MF’s come with a 3 year lock-in period, you are forced to keep your investment for a minimum of 3 years. This would help you to grow your money that considers market fluctuations.

4) ELSS returns are tax free: If you observe, none of the returns from tax saving investment options other than PPF are tax free. NSC, Tax Saving Bank FD, Tax saving Post office TD scheme etc. all these tax saving option returns are taxable based on individual tax slab. However, interest in Public Provident Fund is tax free, but that comes with a 15 year lock-in period (apart from certain exemptions to withdraw in between). The only tax saving investment option that provides tax free returns for short period is ELSS Mutual funds. Since ELSS mutual funds invest in equity related instruments, these are classified under equity funds. Any returns received from equity funds after 1 year is tax free, hence ELSS funds which comes with a 3 year lock-in period, dividends/returns/capital gains from such funds are also tax free.

How to choose best ELSS mutual funds to invest?
All this is fine, but how to choose best ELSS funds to invest. There are a few parameters which can be considered while choosing good funds.

Consider Crisil Rank-1, Rank-2 and Rank-3 ELSS mutual funds
Consider top rated funds by Valueresearchonline. You can choose 5 star, 4 star and 3 star rated funds to invest.
Consider funds where the Assets Under Management (AUM) is more than Rs 100 Crores. This would indicate that such schemes have gained confidence from investors and they are investing more and more in such schemes.
Performance in last 3 to 5 years time frame.
Here are the few top rated ELSS mutual funds which you can review and invest.

Are there any risks involved in investing in ELSS mutual funds?
Since these funds invest 65% in equity, there is some element of risk. Moderate risk and High risk investors can consider this as a tax saving investment option. Also the past performance may or may not repeat in future. Hence investors should consider this risk element and consider investing in such funds.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Article Management Solutions System Article Management Software S

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions