Equity Linked Saving Scheme- In Equity Linked Saving Schemes, you can deposit money in lump sum and also through SIP. By investing in this, you can get better returns and also avail tax benefits.
Instead of investing directly in the stock market, it is better to choose the option of mutual funds. In this, you can invest a fixed amount every month through SIP. In recent times, the number of people investing in SIP has increased rapidly. Investment in mutual funds comes under the ambit of tax. But Equity Linked Saving Schemes (ELSS) is such a scheme, by investing in which you can get better returns and also avail tax benefits. For this reason ELSS is also called tax saving mutual fund scheme. Know here about this scheme which gives double benefit-
Three years lock in period
In equity linked saving schemes, you can deposit money in lump sum and can also do it through SIP. Its lock in period is very short. Generally, the lock in period in schemes like NSC, Tax Saving FD is of five years, whereas in ELSS it is only three years. After this you can withdraw money whenever you want or continue your investment.
You can start investing even with Rs 500
In ELSS you get the option to choose the scheme according to your budget and convenience. You can start investing in it with just Rs 500. There is no limit on maximum investment. According to experts, long term investment in ELSS can give better returns. In such a situation, it is capable of wealth creation.
Tax benefits
There is tax saving on exiting ELSS schemes after 3 years. In this, income tax exemption is available up to a maximum limit of Rs 1.5 lakh under Section 80C of Income Tax. You will get the benefit of this deduction only in the old tax system. Apart from this, you get other tax exemption on the returns you get on investment. In fact, capital gains tax is also levied on the returns received in this. Long-term capital gains on ELSS are tax free up to Rs 1 lakh. Long term capital gains above this are taxed at the rate of 10 percent. Apart from this, cess and surcharge have to be paid.
