Mutual fund ratings are dynamic and based on the performance of the scheme over time – which is itself subject to market fluctuations
Equity Fund is a mutual fund scheme that predominantly invests in equity stocks.
Creating wealth with the money you currently have is a task that many investors approach with great care. They look for investment options that have the least risk and give good returns. Also, some want to avail the added benefit of saving tax while investing with reasonable returns.
There is no dearth of investment products available in the market. If one looks towards mutual funds, there are many options to invest in, however, if one wants to add tax savings to their portfolio as a benefit, then ELSS funds can help them realize the same.
Equity Linked Savings Scheme or ELSS Funds are tax saving equity mutual funds.
Read also: SIP or Lump sum? Factors you should consider before investing
What are ELSS Funds in Mutual Funds?
ELSS is a tax saving equity mutual fund. ELSS is an equity mutual fund investment that invests at least 80% of its assets in equity and equity-related instruments.
What is Equity Fund?
Equity Fund is a mutual fund scheme that predominantly invests in equity stocks.
An equity mutual fund scheme should invest at least 65% of the scheme’s assets in equity and equity related instruments.
The size of an equity fund is determined by market capitalization, while the investment style reflected in the fund’s stock holdings is also used to classify equity mutual funds.
ELSS invests at least 80% in shares as per the Equity Linked Savings Scheme, 2005 notified by the Ministry of Finance.
Are ELSS covered under 80C? How ELSS saves tax?
You can save up to Rs 1.5 lakh per annum in taxes by investing in these funds, under Section 80C of the Income Tax Act, 1961, which helps reduce the amount of income tax you pay. However, the income generated is treated as Long Term Capital Gain (LTCG) and taxed at 10% (if the income exceeds Rs 1 lakh).
Minimum lock-in period for ELSS
There is no maximum investment period. However, there is a lock-in period of three years.
These schemes have a lock-in period of three years from the date of allotment of units. After the lock-in period is over, the units are free to redeem or switch.
How to invest in ELSS?
ELSS offers both growth and dividend options. Investors can also invest through Systematic Investment Plan (SIP), and investments up to Rs 1.5 lakh made in a financial year are eligible for tax deduction.
Read also: 10 Government Savings Schemes With Interest Rates; Check features and other details
read all latest business news Here
