Do you wait until March to save taxes?

Do you rush to save taxes at the last moment due to lack of tax planning throughout the year? Leverage the power of investing by saving taxes online. With a convenient online investment, it is possible to start investing in ELSS, a savings scheme linked to equity and start saving taxes from the beginning of the year under Section 80C of the Income Tax Law.

Let's understand more about ELSS below

1. What is ELSS and how much can be invested in the scheme?

The ELSS or Equity Linked Savings Scheme invests in different categories of capital. An investment made in this category of fund obtains a deduction under Section 80C of the Income Tax Law. The benefit is available for investments of up to Rs. 1.50,000. This investment can be made in a single payment or through the Systematic Investment Plan (SIP) or the Systematic Transfer Plan (STP).

2. How to make an ELSS investment?

You can make an ELSS investment both online and offline. For an online investment, you must complete personal information and nomination details and load a canceled check to process the investment. For an offline investment, you must complete a form, send KYC documents and also a check for the amount of the investment. To obtain a tax benefit for the applicable financial year, the investment must be made before March 31 of that financial year. It is also possible to start the Systematic Investment Plan (SIP) in this fund or make a systematic transfer plan (STP) of an existing fund to obtain the benefit of the tax deduction.

3. What is the benefit of investing in ELSS?

In comparison to other investments under Section 80C of the Income Tax Law, the ELSS has the shortest blocking period of 3 years. In comparison to this, a Public Pension Fund has a blocking period of 15 years and the National Savings Certificate has a blocking period of 5 years. The Employee Pension Fund is blocked until employment ceases and, in general, is treated as retirement savings. The National Pension System is blocked until the subscriber turns 60. On the other hand, ELSS offers investment flexibility throughout the year and the withdrawal of the money invested can be done after 3 years of blocking period. The investor can also opt for the dividend option and earn dividend income from the ELSS.

4. Is withdrawal of the fund mandatory upon completion of the blocking period?

No, withdrawing from the ELSS is completely voluntary after completing the mandatory 3-year blocking period. If the investment is giving good returns and operating according to expectations, the investor can continue to invest for a longer period as well and withdraw whenever he needs the funds. If the fund is not working reasonably well according to the established long-term expectation, then the withdrawal or a change can be considered.

Mutual fund investments are subject to market risks, read all documents related to the scheme carefully.

Disclaimer: content produced by Invesco Mutual Fund

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