Thread by @ithoughtplan

If you are looking for an efficient investment to save tax in India, this is for YOU!

The BEST way is to invest in ELSS Mutual Funds. You can save up to ₹46,800 in taxes under Section 80C!

Here is how! (1/n)

#ELSS #mutualfunds #taxexemption #thread

Every year in March, as the financial quarter comes to an end, there is a rush to invest in tax-saving funds.

And with the quarter end so near, let's look at why ELSS is so popular as a tax saving scheme. (2/n)

#ELSSfunds #taxsavings #investment

What is ELSS Fund?

ELSS fund, or Equity Linked Savings Scheme fund, is a tax-saving scheme that allows you to save tax while investing for your long-term goals. (3/n)

#savetax #financialgoals #taxsavingschemes

The ELSS Funds give you the twin advantage of capital appreciation + tax saving.

Section 80 C of the income tax, offers tax deduction benefits on the principal invested by you in an ELSS scheme. (4/n)

#taxsavings #investments

You can avail of a tax deduction of up to ₹ 1.5 Lakhs from your annual taxable income by investing in ELSS Funds. (5/n)

#taxdeductions

Additional Benefits of Investing in ELSS:

1) Diversification

ELSS funds invest across a diverse group of companies ranging from small- to large-cap, and across various sectors, allowing immense room for diversification! (6/n)

#investing #equity #mutualfunds

2) Low Minimum Amount

Most ELSS schemes allow investors to start investing with as low as ₹ 500. This ensures that you start investing without having to accumulate a reasonable investible corpus. (7/n)

#ELSS #investing

3) SIPs

While you can invest a lump sum amount in an ELSS scheme, most investors prefer the SIP method as it allows them to invest in small amounts and avail tax benefits along with an opportunity to create wealth. (8/n)

#mutualfunds #SIP #personsalfinance

Additionally, you can invest as much as you want but can avail of tax benefits as limited by Section 80C of the Income Tax Act.

Also, you can choose to stay invested, after the stipulated lock-in period of 3 years, for as long as you want. (9/n)

#taxbenefits #financialfreedom

ELSS funds offer three options that you can choose for your investments:

#1 Growth Option

The growth option in ELSS mutual funds does not give you regular dividends. You get the benefits after the tenure of the ELSS. (10/n)

#investments

#2 Dividend Option

If you want regular benefits in the form of a salary, you can opt for the dividend option. In this option, the dividends that you will earn will be exempt from any taxes.

However, you DO NOT get a lump sum at the end of your tenure. (11/n)

#dividend

#3 Dividend Reinvestments Option

ELSS funds offer a third option. Here the dividends are reinvested and the net asset value increases.

Most investors prefer this option when the market is rallying during the lock-in period. (12/n)

#stockmarket #ELSS

ADVANTAGES OF ELSS FUNDS:

#1 Lock-in period = 3 years (shortest among all tax saving options)

#2 Diversified portfolio reduces risk

#3 Invest and get better return potential than traditional options like PPF (13/n)

#ELSS #investing #personalfinance

TAXATION ON ELSS FUNDS:

Capital Gains from ELSS get the same treatment in Income tax calculation as the rest of the Equity Instruments. (14/n)

#equity #capitalgains

Short-term Capital Gains (STCG) attract a tax of 15%.

Long-term Capital Gains (LTCG) are only taxable if gains exceed ₹ 1 Lakh during the Financial Year. (15/n)

#capitalgains #tax

That is all you need to know about ELSS!

It is a terrific way for investors to grow wealth and save taxes. (16/n)

#ELSS #savetax

If you find this thread useful, retweet it and help us reach more people like you. (17/n)

#financialplanning #financialfreedom #financialgoals #ELSS #taxsavings #investing #personalfinance

@threadreaderapp unroll