1. What is ELSS?
ELSS is a type of diversified equi ty mutual fund (MF), which is qualified for tax exemption under section 80C of the Income Tax Act. By in vesting in it, investor gets a twin-advantage of capital appreciation and tax benefits. It has a lock-in period of three years. Investments of only upto `1,50,000 per fi nancial year can be claimed as deductions.
2. How does ELSS compare with other tax saving options?
ELSS has the shortest lock-in period in compari son to other investment products like public provident fund (PPF) or National Savings Certificate (NSC). Dividend declared in ELSS funds is tax-free and no tax is levied on the long-term capital gains. However, risk factor is higher.
3. How can one invest?
You can make a lumpsum or one time investment in an ELSS fund or invest using the SIP route. You can invest as little as `500 per month and there is no upper limit.Financial planners recommend doing an SIP as it reduces volatility, and make you disciplined in tax planning.
4. For what kind of investors is ELSS suitable?
It is suitable for all types of in vestors who are not risk averse and need to invest in tax planning instruments. There is no age to get started in an ELSS.
5. How do I claim the tax benefits of ELSS funds?
In order to claim the tax benefits of ELSS funds, under section 80C, give a copy of your account statement to your finance / HR team as a proof of your investment.
6. Can I continue to hold my ELSS funds after lock-in of 3 years?
Yes. Financial planners recommend they consider ELSS as a part of their equity allocation and hold it to meet their financial goals.
Top 10 Tax Saving Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016
1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan
Invest in Best Performing 2016 Tax Saver Mutual Funds Online
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