Mutual Fund Investment
July 25, 2019

Axis Long Term Equity Fund; Why Does Government Allow Tax Deduction on ELSS?

Equity Linked Savings Scheme is a branch of mutual funds which is specifically chosen for tax deductions. The government of India allows taxpayers to reduce the tax liability every year by investing in Axis Long Term Equity Fund and other ELSS schemes. But have you ever wondered why does the government allow it? What is the benefit of a nation and government when investment is done in any of the ELSS mutual fund? Let us find out how the investment done in top performing ELSS schemes can be helpful to the country.

The Working of ELSS Mutual Funds

The equity linked savings scheme is a category of mutual fund which delivers long term capital gains to the investors and also allows tax deduction under section 80C. Investors can reduce the tax liability by up to Rs 46,800 every financial year by reducing a maximum of Rs 1.5 lac from the taxable income every year. The investments made in ELSS mutual funds are redirected to pure equity instruments selected by the fund manager to deliver capital appreciation on investment. These funds have a lock-in period of 3 years for every investment and are currently the most productive means of tax saving investment in India.

ELSS reduces tax liability but why? Find out why government allows tax deductions on Axis Long Term Equity Fund.

Why Does Government Gives Tax Benefits?

The government exempts tax liability for every individual in India regardless of the wealth possession and income of individuals. The aim is to increase the participation of individuals in equity market. By choosing the path of mutual funds is the ultimate mean for involvement in equity as the investments of the fund is handled by a professional manager. The government is always focused to encourage long term equity investments and by giving a tax deduction every year, it attracts more number of investors.

Any amount invested in an ELSS scheme goes to the equity of various firms which will eventually gain strength for internal and external economic activity. This enhances the growth of companies which possess better growth potential and better management as the stocks are selected after comprehensive analysis by the fund manager. Any investment made in the equity is eventually contributing towards growth of the nation provided it is done for long term. Due to the same reason ELSS mutual funds have a lock-in period of 3 years. Apart from this, the investment made also allows the investor to gain wealth and by financially strengthening more individuals, the government hopes to build a stronger nation.

Why is Axis Long Term Equity Fund a Better Choice?

Axis Long Term Equity Fund is the most chosen ELSS scheme in India as the fund has always delivered best gains to the investors. It has an impressive track record as the fund manager Mr Jinesh Gopani has always utilised the market conditions to deliver best gains to the investors. The fund holds a gigantic AUM along with the trust of millions of investors. Axis Long Term Equity Fund Growth can be considered as the best ELSS fund in India as it has excelled in almost every respect of comparison. This fund can possibly be the best platform to grab the advantage of tax deduction under section 80C.

By investing in Axis Long Term Equity Fund, you are eventually contributing towards development of the nation and the government is rewarding you for that in terms of tax deduction. The best part is the invested amount gets compounded returns from the best equity instruments and in the long term, one can gain outstanding returns on the invested amount. Due to multiple benefits, Axis Long Term Equity Fund can be the best place to invest if you are a taxpayer. Potential investors must note that it is an equity scheme and can go through temporary downturn but the returns in the long term are impressive. The fund must be chosen according to the risk appetite and investment objective.