Business News Desk, To make the mutual fund comprehensive, it has been divided into many different categories. Small cap, mid cap, large cap, multi cap, thematic, focused, ELSS – all these are different categories of mutual funds. Today we will learn about ELSS mutual funds here, which have many great benefits.
ELSS funds have a lock-in period of 3 years
ELSS or Equity Linked Savings Scheme is a tax saving mutual fund. Investors in ELSS funds get the benefits of equity investment as well as tax exemption under Section 80C of the Income Tax Act. However, ELSS funds come with a lock-in period of 3 years. That is, the investment made in these funds cannot be withdrawn before 3 years.
Money is invested in companies from different sectors
Mutual fund houses invest 80 percent of their investments in ELSS funds in equities. The money invested in ELSS funds is invested in shares of companies from different sectors to reduce the risk.
You can save up to Rs 46,800 in tax every year through ELSS
Due to its attractive returns on equity and amazing features like tax savings, this fund scheme is rapidly becoming popular among investors. Tax exemption can be claimed on investment up to Rs 1.5 lakh made in ELSS funds. With this, you can save tax of up to Rs 46,800 in a year.
0 tax on returns less than Rs 1 lakh
The returns from investing in mutual funds come under capital gains tax. You will have to pay 20 percent tax on short term capital gains (if the investment money is withdrawn within a year). You will have to pay 12.5 percent tax on long term capital gains (on a return of Rs 1.25 lakh over 1 year). But in ELSS, if your total return is less than Rs 1 lakh, then you will not have to pay any tax.
