Under Section 80C of Income Tax Act, 1961, you can claim deductions for various investments up to ₹1.5 lakhs in various tax retrenching tools. With precise planning, you can save a significant amount through savings plans with tax benefits that match your investment objective too.
However, among the various tax-saving avenues, the Equity Liked Saving Scheme (ELSS) is one of the most lucrative options. Read on to find out the multiple benefits you can get through ELSS investments.
Dual benefits – tax savings and high return-potential
If you invest ₹1.5 lakhs in ELSS in a financial year and fall under the 30% tax slab, you can save up to ₹46,800 from your income tax outgo. This calculation is inclusive of cess.
Also, ELSS exposes at least 80% of your money to equity-related instruments. And equities offer the highest odds for substantial profits. Also, if you remain invested for a long duration, the effect of market fluctuations becomes moderate. Thus, you stand to gain inflation-adjusted returns through ELSS.
Shortest lock-in period
ELSS features a lock-in period of only three years. During this time, you cannot take out your money from the ELSS funds. But this is the shortest lock-in among all 80C tax-saving instruments in India. ULIPs and fixed deposits (FDs) require you to stay invested for at least five years. Public Provident Funds feature a lengthy 15-year lock-in. And With the National Pension System, you need to lock in your money until you retire.
But with ELSS, at the end of the first three years, you can withdraw and encash your units. Or you may also choose to continue the plan and keep enjoying tax benefits in subsequent years.
Low taxation on returns
The returns from ULIPs are tax-exempt only if your life cover is at least ten times your annual premium. And interests on FDs are taxable.
However, you will have to pay income tax from your ELSS profits only when the annual returns exceed ₹1 lakh. Also, the tax rate is moderate at 10%, as applicable to long-term capital gains.
Anyone can invest
Many investment schemes that offer tax benefits are designed for specific sections of taxpayers. Only senior citizens above the age of 60 can invest in the Senior Citizens’ Saving Scheme. The Sukanya Samriddhi Yojana is open only for girls younger than ten years of age. But regardless of your age, you can invest in ELSS.
Ease of investing
Busy with work, you may face time crunches for investing in tools that permit tax saving under Section 80C. Hence, you may want to look for less time-consuming channels that allow you to invest without elaborate paperwork. And with the launch of the e-KYC facility, ELSS investment has become a matter of a few minutes.
If you choose ELSS to save tax under Section 80C of Income Tax Act, YES BANK offers the MFOnline platform to simplify the process. You can access the platform directly from your YES BANK Net banking account and select the funds of your choice. By simply placing an order to buy, you can start your ELSS subscription.
MFOnline, which stands for Mutual Funds Online, offers the following advantages:
Buying and selling mutual funds online
Facility for systematic investments
Option for intra-scheme fund switches
Ability to view updated portfolios, dividends paid or re-invested, realized gains, annual growth rates, and current NAVs of mutual funds
If you are looking for tax reduction options under Section 80C, you can lessen your tax and earn huge profits with ELSS. And YES BANK makes the process hassle-free!