Plan your investments, with the ELSS advantage

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Plan Your Investments with Tax Benefits As we approach last few months of the financial year, we find ourselves trying to balance tax-saving and investments. As a solution to this dilemma, equity linked saving schemes (ELSS) have emerged as a popular investment channel that offers tax-benefits. What is an ELSS? . Equity linked saving schemes (ELSS) are a kind of mutual fund which offer tax benefits to investors. It is similar to other tax saving instruments like National Savings Certificate (NSC) and Public Provident Fund (PPF). However the returns are directly linked to equity. ELSS have a lock-in period of 3 years. This means that you can’t sell these funds within 3 years of your purchase. ELSS are covered under Section 80C of Income Tax Act and allow investment of up to Rs. 1 lakh in the current financial year. The amount invested in such schemes can be deducted from total income to reduce total taxable income. For example if your total annual income is Rs. 5 lakh and you invest Rs. 1 lakh in ELSS then your taxable income will become Rs. 4 lakh. Benefits of Investing in ELSS :. ü Shorter lock-in period of 3 years as compared to NSC & PPF ü Given an exposure to equity in their portfolio, ELSS have potential of earning higher returns ü The dividend payout option available under ELSS enables you to enjoy gains even during lock-in period ü Investing through Systematic Investment Plan (SIP) averages out your investments over a period of time

Systematic Investment Plan & ELSS:. ü Investing small monthly amounts for a specified period of time to reduce burden ü Taking advantage of fluctuations in stock markets to average the unit cost ü Get more units when the markets are bearish & less when the markets are bullish ü No entry load & other charges

Note: Pre-mature withdrawals are not permitted under ELSS