ELSS (Equity Linked Savings Schemes) are mutual funds which mainly investing in equities. Equity-linked savings schemes offer many benefits like high returns on investment and tax savings under 80C of IT Act.
While expenses or spends are rising faster than income is growing, everybody is searching for the alternate source of earnings. These 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 the time where equity-linked savings schemes (ELSS) comes in the role. ELSS also offers dual tax savings under section 80C of 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 which can give a good returns than ELSS is better option.
1. Tax Savings under Section 80C of 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 IT Act, which states that you can avail 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 allowance up to ₹1 Lakh for investing over the year as per FY19 budget. You have to pay 10% tax on an LTCG (long-term capital gain) crossing the limit ₹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 a higher returns compare to other investment methods, it means they give excellent capital gain. By investing in ELSS you are not only saving money on taxes but also get a higher returns with bearable risk. ELSS can give you 14-16% returns annually on long-term investments. This might help individual to achieve their investment goal and make wealth.
3. Availability of Different Options in ELSS Investment
There are plethora of options available in ELSS investment because investors have many equity liked savings schemes 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 fulfill your investing goals. With help of a good funds management system or manager you can get a 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 you don’t worry. You can start investing in ELSS with as low as ₹500. So you can start investing a small amount every month and gain the benefits of ELSS. SIP help investors to invest a fixed amount every month with regulations.
5. Shortest Lock-in Period
Among all the tax saving schemes like ELSS have a very short lock-in period of three years. ELSS gives you the freedom to update your investments plans with time.
The Bottom Line
Investing in ELSS is a better option for tax savings as well earning wealth with ease. Once you are in investing world there are many types of risk factor 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 very less amount of money.