ELSS (Equity Linked Savings Schemes) are mutual funds that mainly investing inequities.
Equity-linked savings schemes offer many benefits like high returns on investment and tax savings under 80C of the IT Act.
While expenses or spending are rising faster than income is growing, everybody is searching for an alternate source of earnings. This alternate or passive income helps individuals to lead a smooth and comfortable lifestyle without worrying about their savings.
Anyway, it is important that individual choose an investment way or method which suits their needs and give good returns. This is the time when equity-linked savings schemes (ELSS) come into the role. ELSS also offers dual tax savings under section 80C of the income tax act.
It is a better option to invest in ELSS because it comes with multiple benefits. If you are searching for an investment scheme that can give good returns then ELSS is a better option.
1. Tax Savings under Section 80C of the Income Tax Act
Tax benefits are the best benefits of investing in ELSS. Equity-linked savings schemes are imposed for tax advantages under section 80C of the IT Act, which states that you can avail of a tax assumption of up to ₹1.5 Lakhs annually based on your ELSS investments.
Besides this, you are getting tax-free capital benefits and an allowance of up to ₹1 Lakh for investing over the year as per the FY19 budget. You have to pay a 10% tax on an LTCG (long-term capital gain) crossing the limit of ₹1 lakh. You can save a good amount of money by investing in ELSS if you come in the 20-30% tax slab.
2. ELSS Gives Higher Returns
ELSS invests in equities because of that it gives higher returns compared to other investment methods, which means they give excellent capital gain. By investing in ELSS you are not only saving money on taxes but also getting higher returns with bearable risk
ELSS can give you 14-16% returns annually on long-term investments. This might help the individual to achieve their investment goal and make wealth.
3. Availability of Different Options in ELSS Investment
There are a plethora of options available in ELSS investment because investors have many equities like savings schemes and Funds to choose from, each and every ELSS offers a different nature of stocks.
Here you have options to select an investment plan which suits or fulfills your investing goals. With the help of a good funds management system or manager, you can get better returns by investing in ELSS.
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4. Start ELSS Investment with ₹500
If you are about to start investing but have less amount to invest, then don’t worry. You can start investing in ELSS for as low as ₹500. So you can start investing a small amount every month and gain the benefits of ELSS. SIP helps investors invest a fixed amount every month with regulations.
5. Shortest Lock-in Period
Among all the tax-saving schemes ELSS has a very short lock-in period of three years. ELSS gives you the freedom to update your investment plans with time.
The Bottom Line
Investing in ELSS is a better option for tax savings as well as earning wealth with ease. Once you are in the investing world there are many types of risk factors but with ELSS you can get as less as the risk that can easily handle.
ELSS is also good for a retail investor for long-term investments. ELSS can be started with a very less amount of money.