TAX PLANNING

Income Tax planning is one of the most important aspects of personal finance. It forms an integral part of our savings plans. Most of the individuals fail to assess their tax liability and postpone the tax savings to the last minute. Due to these reasons, they end up paying unnecessary taxes or opt for unnecessary tax savings.

ELSS

Investing in ELSS funds is one of the best tax saving options providing tax deduction under Section 80C of the Income Tax Act. The tax saving plans are the best mutual fund investment plans which provide higher returns on the invested capital along with saving income up to Rs. 1.5 lakh to avail reduction in the tax liability. With a lock-in period of three years and investments made in the equity-related securities, these funds tend to provide the maximum benefits of earning wealth over time. Due to the maturity period of three years, the invested capital gets enough time to get enriched

Tax Planning

Benefits of ELSS Mutual Funds

1

Capital Appreciation

By allocating the funds in the stocks of diversified companies across different sectors and market capitalization for a long-term horizon, ELSS tends to offer appreciation in capital. Where stocks and shares of large-cap companies provide income stability, the small- and mid-cap companies with high-growth potential are the best option to attain extremities in the capital during positive market.

2

Tax Savings

By investing your money in the ELSS funds, you can claim a deduction on your total taxable income in that particular financial year. As ELSS falls in the list of specified instruments of Section 80C, one avails the benefit of reducing one’s taxable income with an amount up to Rs.1,50,000.

3

Tax free Return

Tax-free returns are entirely different from the concept of tax savings under Section 80C. It means that the earnings which are attained in the form of a dividend or capital gain are exempted from tax and are not included in the taxable income of the investors.

4

Lock-In Period

In the case of ELSS investments, the investors’ money is locked for three years, before which they cannot redeem or withdraw the same. them. The three years lock-in lets your money grow higher as the fund has investments in the large- and medium-sized companies which have strong potential and fundamentals to enhance your earnings

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