What is ELSS and how it works?

What is ELSS and how it works?

An equity-linked savings scheme or ELSS is a tax-saving investment under Section 80C of the Income Tax Act, 1961. By investing in ELSS, you can claim a tax rebate of up to Rs 1,50,000 a year and save up to Rs 46,800 a year in taxes. An ELSS is the only kind of mutual fund eligible for tax benefits under Section 80C.

What is the difference between equity and ELSS?

Equity Linked Savings Schemes (ELSS) have some unique features: 3 years lock-in period while equity funds have no lock-in period. Tax Deduction in investments upto INR 1,50,000 under section 80C of the Income Tax(IT) Act. Tax at 10% applies to gains above INR 1 lakh.

What is difference between ELSS and mutual fund?

An equity-linked savings scheme (ELSS) is a tax saving mutual fund. It is a fund in which you can invest like in the case of any other mutual fund. The only difference is that these funds are subjected to a lock-in period of 3 years and offer tax exemption under Section 80C of the Income Tax Act.

How do I open equity linked savings scheme?

You can invest in ELSS the same way that you invest in any Mutual Fund. The easiest way is through an Online Investment Services Account. You can invest either as a lump sum or via the SIP (systematic investment plan) route.

Is ELSS same as SIP?

ELSS is an investment vehicle in itself while SIP is not, it is instead a way of investing not only in ELSS but also in any other mutual fund. Therefore, ELSS cannot be compared with SIP as it’s not an apple to apple comparison.

Can I stop SIP in ELSS?

You may cancel SIP even if you have invested through a mutual fund distributor. It helps if you inform your mutual fund agent who fills up the cancellation request for the SIP with the respective AMC.

Which ELSS fund is best?

The table below shows the top-performing ELSS mutual funds based on the past five year returns: