Whether you are a salaried or a non-salaried individual, when you start investing in a scheme, you need to check out its features including its tax saving investment features. As an investor, you should look for investment options that help you save tax and generate tax-free income as well. ELSS (Equity-Linked Savings Scheme) is one thing you can choose to invest in for tax purposes. Investing in ELSS funds is considered a smart option as it can help you generate income, that too with tax benefits.

What are ELSS Funds?

an equity linked savings plan or
ELSS There is a subcategory of mutual funds that are eligible for tax deduction under the provisions of section 80C of the Indian Income Tax Act, 1961. Through this, you can claim tax exemption of around Rs 1,50,000 and save up to Rs 46,800 in a year. in taxes by investing in ELSS mutual funds. The asset allocation in ELSS mutual funds is mostly done for equity-linked securities and equities. So, if you have invested in ELSS, you can invest in things like listed stocks. Apart from listed shares, they may also invest in certain fixed income securities. But these funds come with a lock-in period of just three years, which is the shortest among all Section 80C investments.

What are its main features?

Listed below are several key features of equity-linked savings plans:

• They come with a lock-in period of three years:

A feature of equity-linked savings schemes is that they have a lock-in period of three years. And if you want to invest your money in ELSS then you have to remember this. If you invest your money in ELSS, you may have to wait for three years to get it back as there are no provisions in the plan for premature withdrawal.

• They offer tax deductions:

Another feature of ELSS is that an investor can enjoy tax deduction under section 80C of the IT Act. Therefore, if you choose to invest in ELSS, you can enjoy a deduction of around Rs 1,50,000 annually under the provisions of section 80C.

• No investment limit:

When you choose to invest
ELSS
You can invest any amount in the scheme and there is no upper limit on the amount you can invest. However, it is important to remember that the minimum amount required to invest in ELSS varies from fund house to fund house. So, if you are signing up for ELSS offered by an investment firm, please make sure to check what is the minimum investment amount for the offered ELSS.

• The income generated cannot be affected by inflation:

An ELSS plan is a tax-saving investment option that has the potential to offer inflation-rising returns. So, if you have invested money in an ELSS scheme and the market is going through inflationary phase, you need not worry as the income generated through the scheme may not be affected by the prevailing market conditions.

• ELSS can help you both save money and save tax by:

ELSS funds come with dual benefits. They create wealth and even give you the benefit of tax deduction. As per the provisions of section 80C, you can enjoy a deduction of around Rs 1,50,000 annually if you invest in ELSS funds.

• They are mostly exposed to equities:

If you are planning to invest in this scheme and are probably not aware, ELSS funds mostly invest in equity or equity linked securities. However, the scheme has some exposure to fixed-income securities in addition to equity.


What are the benefits of ELSS?

Equity-linked savings plans come with a host of benefits. Listed below are some of the many benefits:
ELSS
,

• They offer tax deductions:

One of the best benefits of ELSS is that it enables you to enjoy tax deduction under section 80C. Many investors looking for tax-efficient schemes need not look any further than equity-linked savings schemes. So, if you choose to invest in ELSS as a part of your financial plan, you can enjoy a deduction of around Rs 1,50,000 per annum. This can be done under the provisions of section 80C of the Income Tax Act, 1961.

• They can help you accumulate wealth over time by:

As stated earlier, Equity Linked Savings Scheme is an equity diversified mutual fund scheme that comes with a lock-in of three years from the date of investment. However, when the lock-in period is over, you can choose to stay invested instead of withdrawing the money. You can do this to meet your goal, which in this case could be a substantial balance in your account at the time of retirement.

All the things mentioned above are the salient features of Equity Linked Savings Scheme. If you still have any doubts, you can immediately contact a fund manager.

Mutual fund investments are subject to market risks, read all the documents related to the scheme carefully.