Every year the biggest question before working people is ‘Where should I invest to save tax?’ Tax planning is as important as financial planning. In fact, since you’ll need to pay taxes as long as you continue earning, tax planning can even be considered a long-term goal. Also, many people do not understand that investing in tax saving schemes is as important as doing anything else related to their finances. If you do not invest adequately, you may have to give a substantial portion of your savings to the government. Also, some individuals fail to understand that one should invest in a tax saving scheme not only to save tax, but also to be able to earn some capital appreciation from the invested amount.

If you are a moderately high risk individual and do not mind investing in a tax saving scheme that invests in equity for long term capital growth, then you can consider investing in Equity Linked Savings Scheme Huh.

What is Equity Linked Savings Scheme?

Equity Linked Savings Scheme is an open-ended equity linked tax saving scheme that comes with a lock-in of three years and tax benefits. Under section 80C of the Indian Income Tax Act, 1961 an individual can invest up to Rs. 1.5 lakh per financial year in ELSS and claim tax deduction for the same. ELSS is perhaps the only equity mutual fund scheme that comes with tax benefits.

Here is a simple example to help you understand how ELSS works –

Aditi Mittal is a Senior Operations Manager in a Pharmaceutical company, earning Rs. 15 lakh per annum. This puts him in the highest tax bracket. Aditi comes to know about ELSS from a friend and decides to invest Rs. 1.5 lakh in tax saver fund. Now as per 80C of the Indian Income Tax Act, 1961 a person can invest up to Rs. 1,50,000 in ELSS and claim tax deduction for the same. By investing in ELSS, Aditi’s gross taxable income now comes down to Rs. 13.5(15-1.5) lac per annum. Also, the lock-in of three years will ensure that the interest on the invested amount keeps on accruing and can help in building wealth in the long run.

Consider starting a monthly SIP

Those who want to save tax by investing in long term equity funds can consider starting a monthly SIP in this tax saver fund. a systematic Investment Long term investment plans in equity funds are an easy and convenient way to invest. One can start a monthly SIP and develop the discipline of saving. All an investor has to do is to comply with KYC and you can start investing in mutual funds through SIP from the comfort of your home or office using a laptop or smartphone with a good internet connection.

the beauty of
sip The investment is that investors can decide the monthly SIP amount as long as this amount is not less than the minimum investment amount mentioned in the offer document. Investors are free to increase or decrease their monthly SIP investment amount depending on the performance of the equity scheme. One can also benefit from investment techniques like compounding and rupee cost averaging, if they continue to invest through SIPs over a long period of time.

“This is an investor education and awareness initiative by Axis Mutual Fund. Investors need to complete a one-time KYC process. For more details visit www.axismf.com or contact us at [email protected]. Investors should only Should deal with registered mutual funds, details of which are available at www.sebi.gov.in – INTERMEDIARIES/MARKET INFRASTRUCTURE INSTITUTIONS section. For any grievance redressal, investors may call us at 1800 221 322 or write to us at customerservice@ axismf.com or register a complaint on SEBI SCORE portal. https://scores.gov.in,