How much should I invest in ELSS to save tax?

How much tax can be saved by investing in ELSS?

ELSS mutual funds are the only class of mutual funds eligible for tax deductions. You can save up to Rs 46,800 (tax deductions of up to Rs 1,50,000) a year in taxes by investing in ELSS, which is covered under Section 80C of the Income Tax Act, 1961.

How is ELSS tax calculated?

This fund is sold by the investor after a period of 3 years at Rs 3.0 lakhs, thus making a gain of Rs 1.5 lakhs. So this investor investing an amount of Rs 1.5 lakhs in ELSS will now have to pay a tax on the gains above Rs 1 lakh. … 10% tax of this is to be calculated. 10% of Rs 50,000 is Rs 5000.

Which is the best tax saving ELSS?

The table below shows the top-performing ELSS mutual funds based on the past five year returns:

Mutual fund 5 Yr. Returns Min. Investment
BOI AXA Tax Advantage Fund Regular Growth 18.98%
Mirae Asset Tax Saver Fund 20.29% ₹500
DSP Tax Saver Fund – Direct Plan – Growth 17.09% ₹500
Canara Robeco Equity Tax Saver Fund 18.01% ₹500
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Is ELSS better than PPF?

However, PPF offers much lower returns over a longer time horizon than ELSS. The tax benefits and capital safety are more in favour of PPF; ELSS certainly is an option for better returns. It depends on whether you have the appetite for market volatility or not.

Can I withdraw ELSS after 3 years?

You always have the option of investing in Public Provident Funds or Fixed Deposits if you want to reduce your taxable income. … An ELSS investment has a lock-in period of just 3 years, which means that you can withdraw your funds from the scheme after the three year term of your investment is completed.

Is ELSS safe investment?

ELSS funds are essentially diversified equity funds and carry similar risk as equity funds as they both invest in the equity markets. But in addition to the implied equity risk component, ELSS funds have a three year lock-in period after investment during which the money from the fund cannot be taken out.

Can I invest lumpsum amount in ELSS?

ELSS, or Equity Linked Savings Scheme, is one of the most sought-after Mutual Fund schemes in the Indian financial market. … Investment in ELSS can be made in 2 different ways; one can invest a lump sum amount all at once or follow a systematic investment plan (SIP) to grow their investment portfolio.

What is average return on ELSS?

The average return of the ELSS category is about 40 per cent and 11 per cent over 1 and 3 years, respectively. As the lock-in period is of 3 years, many investors exit or redeem their ELSS units. It is often suggested by financial planners not to exit after the lock-in period has ended.

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Is SIP tax free?

Every SIP instalment into an SIP counts towards tax deductions under Section 80C. You can claim a tax rebate of up to Rs 1,50,000 and save up to Rs 46,800 a year in taxes.

What if I withdraw ELSS before 3 years?

Can ELSS be Withdrawn Within 3 years? The simple answer to this question is No. ELSS investments do not provide the option to withdraw the investment amount before the end of the 3-year lock-in period. In ELSS, investors are given fund units against their invested amount.

Is ELSS good for long term investment?

ELSS funds are prone to the inherent volatility of the equity market, but have the potential to generate superior returns in the long term. The volatility risk can be mitigated by investing in ELSSes through the SIP mode.

Is Axis Bluechip fund ELSS?

Axis Long Term Equity Fund is an open ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit. … *As per the present tax laws, eligible investors (individual/HUF) are entitled to deduction from their gross income of the amount invested in Equity Linked Saving Scheme (ELSS) up to Rs.

Does ELSS have lock in period?

There are tax saver mutual funds that are available with a minimum of three years lock-in period. … Close-ended mutual funds are always with a lock-in period, whereas ELSS is the only open-ended type of mutual fund with three years of the lock-in period. The lock-in period is for both lump sum and SIP investment.

How do I choose the best ELSS fund?

If you are planning to invest in ELSS fund to save taxes for the current financial year ie. FY2019-20, here are 6 parameters to consider before choosing ELSS fund.

3. Review of Returns of the ELSS Funds

  1. Annualized Returns i.e. CAGR.
  2. Trailing Returns.
  3. Calendar Returns.
  4. Rolling Returns.
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