What are tax saving funds & how can they help you?
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Transcript of What are tax saving funds & how can they help you?
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…