Here is an example to help you understand how ELSS works –
Natasha Sharma is the Marketing Head in a private firm earning Rs. 12 lakhs per year. This puts him in the highest tax bracket. Natasha learns 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 inches
ELSS
And claim tax deduction for the same. Natasha’s gross taxable income from investing in ELSS has now come down to Rs. 10.5(12-1.5) lakh per annum. Also, the lock-in of three years will ensure that the amount invested will continue to earn interest and can also help build wealth over the long term.
What makes ELSS a sensible investment option for taxpayers?
If you are wondering where to invest this financial year to save yourself from tax woes, you can consider investing in ELSS. Here are some reasons why ELSS is a better investment option than other tax saving schemes –
ELSS has a short lock-in period – Equity Linked Savings Scheme comes with a minimum lock-in period of three years. The lock-in period of three years is still the shortest among the tax saving instruments that are covered under Section 80C of the Indian Income Tax Act, 1961. Investors are free to either redeem their ELSS units after the lock-in period is over or they can choose to stay invested if the scheme is performing and shows good interest earning potential in the long run.
ELSS has SIP option – To ensure that you continue to invest in ELSS without fail, you can consider starting monthly.
sip
In ELSS scheme. A systematic investment plan is an easy and convenient way to invest in an ELSS scheme. If you are a KYC compliant individual, you can invest in ELSS from the comfort of your home using a laptop or smartphone and a good internet connection. SIP is a way to invest small fixed amounts at regular intervals. You will not only continue to invest in a disciplined and systematic manner, you can also benefit from investment techniques like rupee cost averaging and the power of compounding.
ELSS is ideal for long term goals – As ELSS plan is an equity oriented scheme and one needs a long term investment horizon. Thus, investors can target long term goals of their life such as building a retirement corpus, buying their dream home, planning a world tour post retirement or securing the future of their child. If you continue to invest in ELSS for a long time, you may be able to achieve your long term financial goals.
Axis Long Term Equity Fund
Axis Long Term Equity Fund is an open ended equity linked savings scheme with a statutory lock in of 3 years and tax benefits. The investment objective of Axis Long Term Equity Fund is primarily to generate income and long-term capital appreciation from a diversified portfolio of equity and equity related securities. However, no assurance can be given that the investment objective of the scheme will be achieved.
Benefits of Axis Long Term Equity Fund
Here are some of the primary benefits of investing in Axis Long Term Equity Fund –
- Axis Long Term Equity Fund is a Diversified Equity Linked Savings Scheme (ELSS) that invests in a mix of Large Cap and Select Midcap
- The fund has a lock-in of 3 years which is the lowest among other tax saving instruments
- The lock-in of 3 years ensures that the money remains invested in equities and does not get disturbed by market volatility.
- Being an ELSS scheme, this scheme comes with the twin benefits of building wealth and saving tax
- Investors can target long term goals like children’s education and their future, retirement or any other long term financial plan
- Axis Long Term Equity Fund has a lock-in of 3 years which is lowest among other tax saving instruments
Axis Long Term Equity Fund
An open ended equity linked savings scheme with statutory lock-in of 3 years and tax benefits
Mutual fund investments are subject to market risks, read all the documents related to the scheme carefully.