What are the tax benefits of investing in ELSS?
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Investing in Equity Linked Savings Schemes (ELSS) offers several tax benefits that make them a popular investment choice in India. Here are the key tax advantages of investing in ELSS: 1. Tax Saving:- ELSS investments are eligible for a tax deduction of up to ₹1.5 lakh under Section 80C of the IncomRead more
Investing in Equity Linked Savings Schemes (ELSS) offers several tax benefits that make them a popular investment choice in India. Here are the key tax advantages of investing in ELSS:
1. Tax Saving:
– ELSS investments are eligible for a tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act, 1961.
– This deduction reduces your taxable income, resulting in lower tax liability for the year in which the investment is made.
2. Shortest Lock-in Period:
– ELSS comes with the shortest lock-in period of just 3 years among all tax-saving instruments under Section 80C.
– This means your money is not tied up for an extended period, offering flexibility and liquidity compared to other tax-saving options like PPF or NSC.
3. Potential for High Returns:
– ELSS invests predominantly in equities, offering the potential for higher returns compared to traditional tax-saving instruments like PPF or FDs.
– Over the long term, equities have historically outperformed other asset classes, potentially enhancing wealth creation.
4. Dividend Income and Capital Gains Tax Free:
– Dividends earned on ELSS investments are tax-free in the hands of investors.
– Long-term capital gains of up to ₹1 lakh are also currently tax-exempt, providing additional benefits.
5. **Systematic Investment Plan (SIP
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