ELSS: These 10 Benefits Are Available With Strong Returns And Tax Exemption

Investors in Mutual Funds have the option to get better returns along with tax savings. Investments in Equity Linked Savings Schemes (ELSS) of mutual funds are eligible for tax deduction up to Rs 1.50 lakh under section 80C of income tax act. According to the recently released data of Association of Mutual Funds in India (AMFI), the equity schemes through ELSS saw an inflow of Rs 804.73 crore in January 2022, as against Rs 567.04 crore in December 2021. That is, the craze among investors about ELSS has increased. Know 10 benefits of ELSS.

1.) Tax Deduction

Equity Linked Savings Scheme (ELSS) of Mutual Funds is a best option to save tax. In this, the investor gets a tax deduction of Rs 1.50 lakh under section 80C of Income Tax Act

2.) Shortest lock-in period

Equity Linked Savings Scheme has the shortest lock-in period among all the long term tax saving schemes. ELSS has a lock-in of 3 years. That is, after three years you can exit or redeem the scheme. 

3.) Equity Exposure 

One of the advantages of ELSS schemes of mutual funds is that you get exposure to equity. That is, your money is invested in equity, which gives better returns. 

4.) Facility of Investment through SIP 

You can invest in lump-sum in ELSS scheme of mutual funds. In this, investment facility is also available through Systematic Investment Plan (SIP). Many schemes have a minimum SIP of Rs 100 per month.

5.) No maturity date 

The lock-in period in ELSS is 3 years. But there is no fixed maturity date in this. This means that you can continue investing in it as long as you want. 

6.) Choice of Funds

In ELSS, investors have the choice of funds. You can choose the schemes according to your choice.

7.) Savings are a habit 

Savings through ELSS means saving over a long period of time. It can be used for bigger needs in the coming time. 

8.) Expecting Higher Returns

There is a possibility of getting better returns through equity exposure in ELSS.

9.) Tax Saving on Exit

There is tax saving on exit from ELSS schemes after 3 years. But, not completely.

10.) Wealth Creation 

ELSS is very helpful in wealth creation in the long run. It is a popular tax saving instrument among the employed people.