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ELSS funds stand for Equity Linked Savings Schemes. It is one of the best ways to save income tax. ELSS mutual funds are eligible for tax deductions under Section 80C. An investment of up to ₹1.50 lakh in ELSS can be claimed as a deduction from taxable income in India. They are diversified equity mutual funds that have a majority of its assets in equities. As per SEBI guidelines, ELSS mutual funds have to invest 80% or more of their assets in equities. ELSS mutual funds have a lock-in period of 3 years. If a lump sum amount is invested in ELSS mutual funds it is locked in for 3 years from the date of investment. If a SIP is done in ELSS, then each investment will be locked in for 3 years from the investment date.
Though the upper limit of 80c investments is 1.5 lakhs, you should check how much you need to invest in ELSS Mutual Funds and also how much you can reduce in taxes with this investment. You can never time the market. You are better off with investing in a monthly manner so that you can average out your costs on the ELSS funds.
Let us see how Upwardly ELSS Calculator helps you in tax saving:
First, select the type of investment you would want to do, Monthly or One Time investment.
Now, you can determine how much wealth can be gained through investing in ELSS. It can be done by entering your data in the following variables – Investment Amount, Duration of Investment and Rate of Return.
With a monthly investment of Rs 12,500 for 10 years and expected rate of return of 13% p.a. you can expect to earn up to Rs 29,53,889.
Ideally investing in ELSS fund should be done with a long-term view in mind. SIP is the best route to invest in ELSS funds. But that doesn’t mean one cannot invest in ELSS funds a lump sum amount. Here are two illustrations that show how much wealth can be created with investment in ELSS funds.
Illustration 1: The returns from investing Rs 5,000 monthly through SIP in Axis Long Term Equity Fund for different periods is given below. The fund is currently giving 19.95% 5-year return.
|Axis Long term Equity Fund||3 Years (Rs)||5 Years (Rs)||7 Years (Rs)||10 Years (Rs)|
|Maturity Amount (Pre-Tax)||2,47,817||5,16,588||9,15,869||19,06,174|
|Maturity Amount (Post-Tax)||2,47,817||5,04,929||8,76,282||17,85,556|
Illustration 2: The returns from investing Rs 5,000 monthly through SIP in Aditya Birla Sun Life Tax Relief 96 Fund for different periods is given below. The fund is currently giving 19.32% 5-year return.
|ABSL Tax Relief 96 Fund||3 Years (Rs)||5 Years (Rs)||7 Years (Rs)||10 Years (Rs)|
|Maturity Amount (Pre-Tax)||2,45,208||5,07,141||8,91,411||18,29,178|
|Maturity Amount (Post-Tax)||2,45,208||4,96,426||8,54,269||17,16,260|
From both the illustrations it can be concluded that the longer the investment horizon greater the returns. Long-term and SIP are the best combination for wealth creation.
You can start investing in ELSS funds using Upwardly Tax Saving Solution. Just enter your a few details and Upwardly tells you how much you should invest for the current year. You can also set up a SIP in ELSS mutual funds. A SIP of ₹10,000 or ₹12,500 per month is a fantastic method of investing and tax saving at the same time. SIP in ELSS mutual funds will also generate a lot of wealth in the long term. Upwardly tax saving solution allows you to do both SIP and lump sum.