ELSS or Equity Linked Savings Schemes are mutual fund investment schemes that offer secure savings with tax benefits. That is the reason why the ELSS funds are known as tax saving funds. Under the act of 80C of the income tax act, tax payers can save up to 1.5 lakh.
List of ELSS Funds in India
The below lsit of best ELSS Fund based on the returs of last three years
| FUND NAME | 1Y | 3Y and AUM (IN CR) |
|---|---|---|
| Canara Robeco Equity Tax Saver | 20.01% | 12.3% - ₹1216.95 |
| Axis Long Term Equity Fund | 14.62% | 12.15% - ₹22631.51 |
| Mirae Asset Tax Saver Fund | 16.64% | 10.99% - ₹4462.58 |
| Quant Tax Plan Fund | 30.73% | 10.94% - ₹18.80 |
| BOI AXA Tax Advantage Fund | 26.51% | 8.99% - ₹318.52 |
Note: Before investing, subscribers should consider financial goals, risk tolerance, investment horizon. Make a good investment plan and then go ahead.
Features of Equity Linked Savings Scheme (ELSS)
Equity Linked Savings Scheme is one of the greatest investment options, this scheme not only gives security also offers good returns with good tax savings. This scheme does not have any age limit. So one can start savings once they start earning.
Key Features of ELSS
- Offers Tax-benefits up to Rs 1.5 lakh under section 80C of the income tax act.
- ELSS offers two investment options (Dividend or growth options).
- ELSS comes with a lock period of 3 years.
- The performance of the ELSS is completely based on the performance of the market.
HOW TO INVEST IN ELSS ONLINE
- Select the best tax saving mutual fund:
- Invest in the best mutual fund that benefits you.
Choosing between Regular and Direct Plans of Tax Savings Mutual Funds Schemes
Every fund has two plans with different NAV.
Regular Plan
Regular plans are traditional Plans and charges higher expense ratio every year.
Direct Plan
Direct plans on the other hand has low expense ratio, as there is no distributor involved. They provide better returns.
Selection of Intermediary
Go to the intermediaries who help you invest in ELLS. This is not mandatory, sometimes you can also go directly to invest in ELLS funds.
Lump-Sum Investment or SIP in ELSS Mutual Funds
- SIP is the best way of investment in ELSS
- SIP offers help you reach the target faster and quicker.
- Getting your money back after 3 years:
- Subscriber has to fill a form for redemption after 3 years after that money will be credited to your account.
Follows the following steps to invest in the ELLS fund to enjoy the benefits.
Steps to invest in ELSS:
| Steps | Topic | Details |
|---|---|---|
| Step 1 | Select the tax saving scheme that suits you. | The Shcem basically depends on the returns that offers. |
| Step 2 | Select between an option of regular mutual funds, or tax saving mutual fund schemes | ELSS mutual fund has 2 plans - Regular & Tax Savings. |
| Step 3 | Proceed and open a bank account | It is the important step as the dividends will have to be credited in the bank account under your name. |
| Step 4 | Pick your intermediary | Motual funds do not charge any commision for any service ifact the companies offer deals when they get new client. |
| Step 5 | Mutual fund distributor | Mutual fund distributor invest behaf of the subscriber that suits the subscriber (Just like the caution). Select the ELSS that benefits you not the distributor. |
| Step 6 | Online Distributor | GO to the online distributor, to invest in ELSS online and selct the option that gets best returns. |
How does ELSS compare with other Tax Saving instruments?
| Name of Instrument | Lock In period | Returns and Tax on Returns |
|---|---|---|
| ELSS | 3 Years | 10-12% - LTCG Tax |
| Tax-Saving FD | 5 years | 6-7% - Income Tax |
| National Saving Certificate (NSC) | 5 years | 7-8% - Income Tax |
| Public Provident Fund (PPF) | 15 years | 7-8% - No |
| National Pension System (NPS) | Up to age 60 | 8-10% - Partially Taxable |
Advantages of ELSS
- Tax benefits
- Secure Savings
- Offers higher returns
- Gives the option of dividends and growth
- No limit
Disadvantages
- There will be a lot of documentation procedure to be followed
- Returns depend on market performance, if the market performance is low the returns will also below.
- There is no premature withdrawal.
- NRIs are not allowed to save in this scheme.
Where to Open an ELSS Account
Many nationalized private banks offer this option to open the ELSS account. Also one can open the ELSS account in SBI. Subscriber has to discuss with the banker that you wish to open the ELSS account and after the approval, the subscriber can go-ahead to open the ELSS account to enjoy the benefits.