ELSS- Effective way of Tax Planning & Creation of Wealth

As we grow in life, saving for tax or planning for income tax deduction becomes an unavoidable exercise.

Government of India allows you to save tax under Section 80C, 80D, 80EE . You can claim tax deduction up to ₹ 1.5 lakh under Sec 80C, additionally you can save ₹ 25,000 ( ₹ 50,000 for senior citizens) under Section 80D and ₹ 50,000 under Section 80EE . As beginners we are introduced to tax saving options such as PPFs, Insurance, ULIPs and more.

Other than traditional investment options, you can consider investing in equity as an asset class with ELSS (Equity Linked Savings Scheme), which is an equity mutual fund with a 3-year lock-in.

 

 

WHAT IS ELSS ?

ELSS म्यूच्यूअल फंड्स वह म्यूच्यूअल फंड्स स्कीम है जिसमे हम अपने निवेश को तीन साल से अच्छी समय के लिए करते है इस फण्ड में निवेश करने से हमको इनकम टैक्स के 80C  में भी छूट मिलती है जिसकी अधिकतम सीमा150000 तक होती है ेल्स का पूरा नाम इक्विटी लिंकिंग सेविंग स्कीम है तथा इस फण्ड में निवेश करने से हमको मुनाफा होता है क्यों कि ये निवेश लम्बे समय के लिए किया जाता है | इस फण्ड में निवेश अधिक तर लोग अपने रेटायर्मेंट के लिए भी करते है, PPF और रेटायर्मेंट स्कीम में निवेश करने से अच्छा लोग इस फण्ड में भी अपने रेटायर्मेंट कि प्लानिंग करते है |

ELSS is a type of Mutual Fund which allows you to claim for income tax deduction. You can save up to ₹ 1.5 lakhs a year in taxes by investing in ELSS, which is covered under Section 80C of the Income Tax Act, 1961. However, you can choose to invest more than ₹ 1.5 lakhs, but the excess will not qualify you to avail the tax benefits as per the provisions of Section 80C.

Traditional tax-saving instruments typically offer fixed returns and does not consider the high inflation prevalent in an economy like ours. For example, assuming 6% rate of inflation, investments which have fixed returns promise a return of 8%, in this case your real return would be merely 2%.

On the other hand, ELSS mutual funds invest in equities and hence, Has the ability to generate higher inflation-adjusted returns over a longer timeframe. If you stay invested in ELSS for Long-term, it helps set off the short-term volatility associated with equities. Since these funds are managed by professionals, you need not worry about timing the market.

As we grow in life, saving for tax or planning for income tax deduction becomes an unavoidable exercise.

Government of India allows you to save tax under Section 80C, 80D, 80EE . You can claim tax deduction up to ₹ 1.5 lakh under Sec 80C, additionally you can save ₹ 25,000 ( ₹ 50,000 for senior citizens) under Section 80D and ₹ 50,000 under Section 80EE . As beginners we are introduced to tax saving options such as PPFs, Insurance, ULIPs and more.

Other than traditional investment options, you can consider investing in equity as an asset class with ELSS (Equity Linked Savings Scheme), which is an equity mutual fund with a 3-year lock-in.

Benefits 

Shortest

ELSS has lock- in period of 3 years which is the shortest when compared with other tax saving instruments under Section 80C. Tax-saving FDs have a 5 year lock-in & PPF has a 15 year maturity. Hence, ELSS allows you greater flexibility in the medium term.

Potentially higher returns

Since ELSS mutual funds invests in equity markets, returns generated through them are significantly higher than other tax saving instruments.

Better post-tax returns

Long term capital gains of up to Rs. 1 lakh a year from ELSS mutual funds are exempt from income tax and long-term capital gains above Rs. 1 lakh are taxed at 10%.

 Allows you to create wealth

Corpus generated out of ELSS investment can also be used to fulfil your financial goals. You can sync your ELSS investments to attain goals across life stages such as building a retirement kitty, saving for their child’s education, buying a car or making a down payment for their house.

Shortest

ELSS has lock- in period of 3 years which is the shortest when compared with other tax saving instruments under Section 80C. Tax-saving FDs have a 5 year lock-in & PPF has a 15 year maturity. Hence, ELSS allows you greater flexibility in the medium term.

ELSS Mutual Funds Scheme 

Scheme	Category	Dividend Date	Dividend (Rs/Unit)
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2021-06-10	0.7
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2021-06-10	0.7
LIC MF Tax Plan - IDCW	ELSS	2021-03-26	0.25
LIC MF Tax Plan - Direct Plan - IDCW	ELSS	2021-03-26	0.25
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2021-03-15	0.7
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2021-03-15	0.7
LIC MF Tax Plan - IDCW	ELSS	2020-12-30	0.25
LIC MF Tax Plan - Direct Plan - IDCW	ELSS	2020-12-30	0.25
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2020-12-02	0.7
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2020-12-02	0.7
LIC MF Tax Plan - IDCW	ELSS	2020-09-30	0.25
LIC MF Tax Plan - Direct Plan - IDCW	ELSS	2020-09-30	0.25
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2020-09-10	0.5
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2020-09-10	0.5
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2020-06-26	0.5
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2020-06-26	0.5
LIC MF Tax Plan - IDCW	ELSS	2020-06-26	0.25
ICICI Prudential Long Term Equity Fund (Tax Saving) - IDCW	ELSS	2020-03-13	0.6198
ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct Plan - IDCW	ELSS	2020-03-13	0.6198
SBI Long Term Equity Fund - Regular Plan - IDCW	ELSS	2020-03-06	3.0103894
SBI Long Term Equity Fund - Direct Plan - IDCW	ELSS	2020-03-06	3.8072572000000005
Axis Long Term Equity Fund - IDCW	ELSS	2020-01-28	1.8593581499999998
Axis Long Term Equity Fund - Direct Plan - IDCW	ELSS	2020-01-28	3.0103893700000004
LIC MF Tax Plan - IDCW	ELSS	2019-12-31	0.22135212000000004
LIC MF Tax Plan - Direct Plan - IDCW	ELSS	2019-12-31	0.22135212000000004

Category and AMC level dividend history is available for past 3 years. You can use search funtionality to search for individual scheme to get complete historic dividend list.