It is a common tendency among us to look for options to save taxes when we are at the 11th hour when it comes to filing our taxes in a fiscal. Most of the times we tend to forget about ELSS tax saving funds. We do it either by choice or by design. ELSS stands for equity-linked savings scheme and is a mutual fund that offers you the chance to diversify apart from helping you save taxes as well. In these funds, most of the money is invested in the equity markets.
How to invest in them?
You can choose SIPs (systematic investment plans) by the leading service providers such as Reliance Smart Money in order to invest in the ELSS mutual funds. However, you need to keep in mind that the lock-in period in these cases is three years. You get growth and dividend options from these funds as well. In case of growth, you get a lump sum after the lock-in period ends. In the case of a dividend, you get dividends whenever a fund makes an announcement in that regard. The best part of this is that this happens even during the lock-in period.
Increasing Popularity
With every passing day, these funds are becoming more popular. There are several reasons that have contributed to its popularity:
- The dual benefit of investment and tax saving
As you would know already, you get the double benefits of investment and tax saving from an ELSS. It has a degree of market edge thanks to its exposure to the equity market. Therefore, your money can grow quicker than what most other investment options would do for you. At the same time, your taxes are kept under check as well. This is what makes it so different from the likes of PPF (public provident fund) that are simpler savings instruments.
- Opening Options
Thus, as you may have understood by now, when you have an ELSS you have several options that you do not get elsewhere. You get to earn great returns while saving your taxes.
An ELSS also has a much lower lock-in period when you compare it to other options that help you save taxes. It obviously provides the best tax returns, which are incidentally tax-free! More importantly, it opens the world of equity investment for you.
blog 