Investments in ELSS funds are eligible under Section 80C of the Income Tax Act for tax deductions of up to Rs 1.5 lakh. Aditya Birla Sun Life Tax Relief 96 and L&T Tax Advantage Fund are a term on the short-term underperformance of our two suggested schemes.
At the beginning of the financial year, i.e., after April 1, the best time to invest in ELSS. Since ELSS is an equity-oriented investment, it is a good idea to average out the Rupee-cost by investing in ELSS through SIP every month. Systematic Investment Planning (SIP) allows investors to get them a higher number of fund units when prices are low, and fewer units when prices are high – thus averaging the cost per unit over time. Regular SIP investments in ELSS, therefore, have the potential to provide the highest yields while making tax-saving investments.
How can I invest in ELSS?
Investing in ELSS mutual funds is a step-by-step guide:
Step 1 – Research
The first step in ELSS investing is to find the right ELSS fund to meet your needs. The hundreds of AMCs, banks and fund companies are offering thousands of ELSS funds. Fortunately, many professional investment teams can help point investors in the right direction and lead them free of charge through the ELSS investment method.
Step 2 – Set the Amount
The main advantage of being a tax-saving investment in ELSS investments. Section 80C can save a total of Rs 1, 50,000 from taxation, but any amount exceeding Rs 1, 50,000 will not be eligible for tax benefits. Said that, if the investor has an existing investment (such as 5-year FD, PPF, etc.) under Section 80C. Only the remaining amount (other assets of Rs. 1, 50,000 under section 80C) is eligible for a tax deduction. Example: If Mr. Ashish gave a 5-year term deposit of Rs. 60,000 is invested, they will be able to claim tax benefit under Section 80C (even if they have invested more than Rs 90,000 in ELSS). His ELSS investment at 90,000. The reason for this is that Rs. 60,000 + Rs. 90,000 = Rs. 1, 50,000.
Step 3 – Investing
The normal investment method includes endless hours of documentation and visit to and from the fund house, AMC, or bank that invests. Online investments are a paperless, hassle-free and effective investment platform, which can be carried out almost immediately and tracked.
Step 4 – SIP or Lump Sum
After selecting the fund scheme, the investor has to decide whether to invest the amount in a large lump sum or less and regular installments. Rupee cost average-more units are bought when the price is low and vice versa-making full use of market fluctuations to benefit the investor is the primary advantage of investing small amounts frequently through SIPs.
Step 5 – Redemption
Redemption of an ELSS scheme implies selling off your invested interest in the scheme and gaining any profit from the investment. To use the tax benefit, the minimum lock-in period of ELSS is three years. To produce maximum yields, funds may be allowed to extend beyond three years.