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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Created on Apr 23rd 2021 05:47. Viewed 427 times.