How to Save Income Taxes & Reap High Returns Instead!

How to Save Taxes & Reap High Returns Instead..!
ELSS or Tax Saving Mutual Funds

Simply put, ELSS is a type of diversified equity mutual fund, which qualifies for tax exemption under section 80C of the Income Tax Act. 

If you are wondering, ELSS stands for Equity Linked Savings Scheme.
The name says it all. So, if you are looking to save on taxes and grow your investments, this might potentially be the perfect option for you.

Here's how much you can save on taxes by investing in an ELSS.

An Extra Rs 45,000 In Your Pocket!

You heard right.
You can save up to Rs 45,000 in a year by investing in ELSS.
You ask, "How?"
Okay, let us do the math for you.
If you invest up to Rs. 1,50,000 in an ELSS and you fall into the 30% tax bracket, you can easily save up to (15,00,00 x 30% =) Rs 45,000!
What's more is, if you invest Rs. 1,50,000 in any ELSS with a CAGR of 15%, you would potentially reap over Rs 3 lakhs in the next 5-6 years and double that in the next 10 years.
In comparison to that, an FD and a PPF would lead you to just R.s 2,25,000 and Rs. 2,20,000 in the first 5 years.

No wonder mutual funds are the favorite of thousands of people in India.

And nevertheless, for the high tax payers, ELSS is the best option no doubt.

Why To Choose ELSS - Most Efficient Tax Saving Instrument

For those who still want to know more why they should invest in ELSS Mutual Funds, here is a list of merits you cannot ignore.

Benefit 1: Capital Appreciation..!
 - Like other equity mutual fund schemes, these mutual funds too are optimized for highest returns possible.

Just start a SIP in the right fund and rest assured that you grow your wealth even without any significant effort on your part whatsoever! 

You can depend on the best ELSS to potentially double your money in a matter of 3 to 5 years (considering the market is favorable, of course).

Benefit 2: Tax Efficient-
 When compared with any other diversified equity mutual fund, the taxation on the gains are the same.

So, what makes ELSS differ from any other diversified mutual fund? You can invest up to Rs 1,50,000 in an ELSS and get that as a tax deduction under Section 80C in a financial year. 

(No, you cannot get that from any equity mutual fund.)

And when compared to other popular tax saving instruments such as Tax Saving Fixed Deposits or PPF, ELSS is definitely better.

Not only does an ELSS reap higher returns, long-term gains from an ELSS is absolutely tax free just like that of PPF.

(If you are wondering about Tax Saving Fixed Deposits, you may earn lesser returns on your investments and that too taxable.)

Moreover, both the dividend incomes and capital gains earned from ELSS is tax free.

Very good, right? We know.


Benefit 3: Shorter Lock-In Period..!

 This is what makes ELSS better than all other investment options.

While your tax saving investments in PPF is locked in for 15 years, NSC for 6 years and tax saving bank fixed deposits for 5 years, your investments in ELSS is locked in for just 3 years. So, if you are looking for tax benefits along with higher return potential, but do not want to commit your money for very long period of 5 to 15 years, ELSS is something you should look for.

Benefit 4: Efficient Fund Management ,..
- You just cannot deny this point. Unlike in a term deposit or a NSC, where you put your money in, and the issuer just lends it out, while paying you a nominal return; a mutual fund is geared to grow your investment in a much more efficient way.
Why?

Because a mutual fund is expected to be managed by professional fund managers. They invest with an aim to make higher gains for their investors.

We agree, investing in a mutual fund is risky per se. But if you invest in the RIGHT mutual fund, you would reap much higher gain than you can probably expect from a fixed deposit, PPF account or savings certificate. 

And the reason behind it is, perhaps the long-term experience and market knowledge of the fund managers working to grow your money day in and day out.

In other words, if you are looking to grow your investment, in a shorter time compared to other tax-saving instruments and that also, not paying the government any share of it...

It's time to invest in an ELSS today.

And to make that whole process easier for you...

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