What Are Tax Saving Funds

&

How Can They Help You?

Overview

• As a working individual, you are bound to be thinking about the different tax

planning activities that come around each year. You would want to invest in

mutual funds, but may not be sure of the kinds of tax saving funds that

might be present. So, here is a quick guide on what they are and how they

can help you.

Why Invest in Tax Saving Funds?

• Across the different tax saving sections, tax saving mutual funds or ELSS

is popular in section 80C. It is an equity diversified fund and investors can

enjoy the benefit of both capital appreciation as well as tax benefits within

this single investment. You would be able to claim deductions from your

taxable income and thus have a dual benefit.

Advantages of Investing in ELSS

• It is an equity mutual fund that has most of the invested amounts in equities

and hence the returns that come through are within the equity markets itself.

• There is a lock-in period that is present with an ELSS of 3 years and that

means if you are to start a tax saving mutual fund then all your investments

would be non-retrievable for a 3 year period.

• After the three year period, you can get a lumpsum on the product.

Cont…

• These ELSS funds have the option of both dividend and growth and it is

more of a choice on each end towards what to choose.

• So, you can either choose a plan with an either dividends or a specific growth

plan for that investment – that is decided during the lock-in period.

• The returns from the ELSS are tax free and you can claim an exemption of

Rs. 1,00,000/- as a deduction from your total gross income.

Cont…

• The key benefit is achieved when you look at the long term performance of

the ELSS.

• A SIP could be a great entry point in a market that is unpredictable. This can

be started with an investment as low as Rs. 5000/- and with a periodic

payment of only Rs. 500/- and so on.

Conclusion

• Quite obviously, this is one of the most sought after methods when it comes

to tax saving and you would be able to earn both on the mutual fund

investment as well as the tax saving that is made. Each of these investments

are made by financial experts, leaving you with a higher prospect of gain.

Thank You…