Why ELSS mutual funds are the best option for tax saving?

1. Why ELSS mutual funds are the best option for taxsaving? • Tax planning is important for anyone’s financial planning process. Investment strategies can be formulated keeping in mind the financial goal as well as the tax implication of an investment. When it comes to tax saving, there are various investment products available such as ELSS (Equity Linked Savings Scheme), National Pension Scheme (NPS), Public Provident Fund, ULIP (Unit Linked Investment Plan) and National Savings Certificate etc which can be chosen depending on the suitability. ELSS is one of the most preferred and best tax saving options for various reasons. Let’s see why ELSS mutual funds are the best option to savetax. • So, what are ELSS mutualfunds? • Equity Linked Savings Schemes are the tax saving funds that give you the benefit of tax deduction under section 80C of the Income Tax Act, 1961 up to INR 1.5 lakhs. ELSS funds will have more exposure to equity and come with a mandatory lock-in period of three years. There are many top ELSS mutual funds in India to choose from depending on the fund performance and other parameters. • ELSS mutual fund tops the chart as the best option to save tax with its unique features and the benefits offered. Following are some of the reasons that make it the best tax saving investment option- • Tax implications: Investing in ELSS tax saving funds provide you tax benefit of up to INR 1.5 lakhs under Section 80C of the Income Tax Act, 1961. Once you redeem the investment any time after the completion of the lock-in period, gains are subjected to a long term capital gain tax of 10% only if the long-term gains in equity for that particular year exceeds INR 1 lakh. That way, ELSS offers better post tax return when compared with many other tax saving investment options like term deposit andNSC. • No fixed maturity period: Unlike many tax saving investment options that comewith • long-term maturity period, ELSS tax saving funds have no fixed maturity period and can be redeemed any time after the completion of three years lock-in period. However, equity investments are considered to generate a higher return over the longrun. • Short lock-in period: Compared to all other tax saving investment options, ELSS tax saving fund comes with the lower lock-in period of only three years. After the completion of three years, your investment can be redeemed which makes it the most liquid tax saving option in comparison toothers. • Higher return: ELSS tax saving funds being the equity-oriented investment option has the potential to generate higher inflation adjusted returns over the long-term in comparison to other popular tax saving investment options like PPF, NPS and NSC etc. Specifically, if you are a young investor who can bear the higher risk, investing in some of the top ELSS mutual funds in India can help you build a good amount of corpus to achieve your long-term goals along with saving tax. Some of thetop ELSS mutual funds in Indiaare listed below – • Axis Long Term EquityFund • Invesco India TaxPlan • Kotak Tax SaverFund • Tata India Tax SavingsFund

2. o Aditya Birla Sun Life Tax Relief 96Fund • Systematic investment: The best part of investing in ELSS tax saving funds is that you have the flexibility to invest in a lump sum or through a systematic investment plan (SIP) route. With SIP option, you can start investing monthly on a regular basis in a disciplinedway. • With all the pros and unique benefits offered, ELSS stands out as the best tax saving investment option available today. However, while investing in ELSS it is also important to consider your individual financial goal, investing style, investment horizon and risk taking ability. Assessment of risk and consideration of individual goals can help you make rational investmentdecisions.