Why ELSS is the Best Tax Saving Option in India?
Rising tax bills is a major problem that has been prevailing in our country for a long time. While one way to look at is that it’s good to have higher tax since it means you earned more, but there’s no reason to be happy about paying a larger share of your hard earned money to the tax authorities. So, what’s the solution?
Investing in ELSS Funds is perhaps the best thing you could do to save your income from the clutches of high tax bills. This is a super legit way of moulding your tax bills according to your affordability, besides earning good returns. These funds are very popular in India, as they are mostly used for the purpose of fighting against the taxation which is still lacking at some areas.
Let’s read more about the ELSS and find out how they can help you grow financially stronger.
What is an ELSS Fund?
An Equity-Linked Savings Scheme, or simply the ELSS, is an equity-oriented equity mutual fund which is designed specifically for the purpose of saving taxes, in addition to earning good returns. These funds attract the deductions available in section 80C of the Income Tax Act, 1961, and can fetch you massive deductions from your annual total taxable income. They are considered to be the best tax-saving options in India, and hence, are in high demand round the year.
What are the advantages of investing in ELSS schemes?
There is a bunch of advantages that you get when investing in the top ELSS plans in India. Whether you’re a taxpayer wanting to save taxes, or just a regular investor looking out for top-performing mutual funds for your portfolio, you’ll find something or the other with these funds. Here are some of the advantages that you can devour by investing in the best ELSS schemes: -
- Large Saving on Taxes
The taxation system in India is governed by the Income Tax Act, 1961. Under this act, the law provides certain deductions and relaxations from the tax liability, thereby promoting legit curbing of tax. ELSS funds are authorised to fetch these deductions. An investment in an ELSS plan can help you fetch a deduction from your annual taxable income that may go up to ₹1,50,000. If achieved in full, this deduction can help you save as much as ₹46,800 from your tax bill. - Excellent Returns
High tax-saving isn’t the only thing that lures one to invest in the top-performing ELSS Funds. Besides good tax-saving, these funds also provide smart returns that can outlast your expectations. As per the latest market analysis, the best ELSS funds have yielded results as high as 20% between the last 3-4 years. This is an excellent yield considering that these funds are primarily for tax-saving. Hence it will be apt to say that ELSS produce returns as good as top-performing small cap funds, which produce the highest yield in the market. - Best for Long-Term Investment
If you are looking for a long-term investment, then nothing can work better for you other than a top ELSS Fund. As it’s a hard-core fact of the mutual fund industry that no investment can work up to expectations if it’s not allowed proper time, ELSS lets you take advantage of this theory. These funds carry a lock-in period of 3 years during which no redemption is allowed. Since you’ll be forced to keep your funds for 3 years, you’ll automatically achieve a good corpus by the time you’ve reached your investment horizon. - No Exit Load
Exit load is an unnecessary burden on the investors. It’s a fixed charge that cannot be avoided unless the minimum investment period (1 year in most cases) is over. Since there’s an inbuilt of lock-in period of 3 years in ELSS Mutual Funds, there is no exit load on these funds. The investors can thus enjoy a long-term wealth creation journey, with no burden of exit load to pester them in between.
Thus, if you are worried about your ailing tax problems and have no way out to this situation, then you must start investing in the top ELSS schemes in India. Get in touch with your financial advisor and chalk out a fruitful plan for yourself.
ELSS Mutual Funds are considered to be the best tax-saving options in India. In this article, all the valid reasons have been penned down that testify that ELSS is indeed the best tax-saving option.