Step by step tax saving with ELSS

by Vpalkar CA V Paalkar & Co.

An Equity linked saving scheme (ELSS) is similar to tax-saving instruments like National Savings Certificate and Public Provident Fund. However, the returns are directly linked to equity. An ELSS has a lock-in period of 3 years.

It is covered under Section 80C of the Income Tax Act and allows investment of up to Rs. 1 lakh in the current financial year. The amount invested can be deducted from total income, reducing total taxable income.

ELSS offers benefits byways of the shorter lock-in period (3 yrs) than NSC & PPF. ELSS has the potential of earning higher returns and Dividend payout available during the lock-in period

Moreover, Investing through a Systematic Investment Plan (SIP) averages out your investments over a period of time.


How to set up ELSS?

Systematic Investment Plan & ELSS :

  • Invest small monthly amounts to reduce the burden
  • Take advantage of fluctuations in stock markets to average the unit cost
  • Get more units when the markets are bearish & less when the markets are bullish
  • No entry load & other charges

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About Vpalkar CA Freshman   V Paalkar & Co.

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Created on Apr 23rd 2021 05:47. Viewed 446 times.


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