Investors in the old tax regime should ensure the tax planning for FY 25 well before the deadline of 31st March.
In the old tax regime, tax payers can claim a deduction of up to Rs 1.5 lakhs under section 80 C by investion in certain financial instruments.
Mutual Fund ELSS is such an Financial instrument.
What is ELSS?
Equity Linked Savings Schemes are diversified equity funds with a lock-in period of 3 years.
These funds diversify across different industry sectors and market capitalization segments.
Y
ou can start investing in ELSS with a minimum of Rs 100 only.
There is no upper limit of investments in ELSS;
however, you can claim tax deduction of up to Rs 1.5 lakhs u/s 80C.
Why invest in ELSS for tax savings?
Equity linked savings schemes are equity market linked investments,
and as an asset class,which can be volatile, but have
the potential of giving superior returns in the long term.
Since ELSS funds can invest across market capitalizations segments,
there is opportunity for fund managers to create alphas by investing in a bigger universe of stocks.
The three year lock-in period of ELSS enables fund managers to invest in high conviction stocks
for a long period of time because of relatively less redemption pressure.
ELSS is the most liquid investment option u/s 80C. ELSS has lock-in period of three years,
whereas minimum lock-in period of other 80C investment options is 5 years.
ELSS is one of the most tax efficient investment options u/s 80C.
Capital gains in ELSS are tax exempt up to Rs 1.25 lakhs and taxed at 12.5% thereafter.
In this article we will review Groww ELSS Tax Saver Fund.
-article courtesy "Advisor Khoj
