ELSS: Equity Linked Savings Scheme
- This type of investment is basically a mutual fund in the category of 'Equity: Tax Planning'.
- Money in this type of Mutual Fund is invested in equity / stock market.
- Money is generally invested in reputed companies.
- The risk factor is average in this type of Mutual Fund.
- Return on investment may be better than any other Tax-Plan available in market.
- Investment is locked for three years.
- Investment amount is eligible for deduction under section 80C of income tax with upper limit of 1.5 lakh.
- This plan is the best plan for Tax Planning as well as wealth creation in India.
- Profit gained after three years of investment is termed as' Long Term Capital Gain'.
- This long term capital gain is exempted from paying income tax upto gain of 1 lakh.
Now, there are numbers of Mutual fund schemes from different mutual fund houses. We will discuss few good funds as examples of 'Equity: Tax Planning' category.
- Birla Sun Life Tax Relief 96 Fund: Invests in companies like Sundaram-Clayton, Honeywell Automation, Gillette, Bayer Cropscience, Johnson Controls – Hitachi, ICRA, Thomas Cook, Kotak Mahindra Bank, Pfizer and Glaxosmithcline Pharma. Yearly return of this fund is roughly 19 % as on date.
- Axis Long Term Equity Fund: Invests in companies like HDFC Bank, HDFC, Kotak Mahindra Bank, Maruti Suzuki, Bajaj Finance, L & T, Pidilite Industries, Motherson Sumi, Bosch and Cummins India. Yearly return of this fund is roughly 16 % as on date.
- Tata India Tax Savings Fund: Invests in companies like HDFC Bank, ICICI Bank, Yes Bank, Tata Motors, Future Retail, Avenue Supermarts, HCL Technologies, Tata Steel, ITC and Future Consumer enterprise. Yearly return of this fund is roughly 20 % as on date.
The examples are given above for your easy understanding. There are other good funds available in this category, which may be found easily in the internet.
Happy Investing !!!
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