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Many investors fear to invest in equities so they go towards stock market investments because they fear to risk, so to attract these investors central government designed a new scheme for them on mutual fund based equity linked savings scheme (ELSS), by elss scheme they get tax exemption is done on equity based mutual funds.
since they will have tax exemption on their investments so they are attracted towards it and they invested maximum amount of their investment in these, Elss Schemes have many benefits, How to get more tax savings from ELSS and guaranteed investment returns so, here are the 6 different things to learn about ELSS:
1.What are ELSS Funds?
Equity-based mutual funds that are invested in the equity and equity-based securities are ELSS funds, some funds make corpus investment in the debt securities, the objective of ELSS is to create wealth for the investor on long term basis.
2.How much can be invested in ELSS?
An investor can invest the total amount in single investment or systematic investment plan (sip), the best way of investment is sip, by this way investment is divided into 12 parts and it is easy to average the rupee cost, single investment leads to loose when the time has a maximum rupee exchange.
3.What are benefits of ELSS investment to investment?
According to section 80C in Income Tax Act, investors have the opportunity to exclude tax from the gross income, but this is only applicable upto 1.5lakhs, ELSS have a few exceptions and you won’t have tax implemented on the the tax benefits that a investor gets.
4.What is the lock in period of ELSS?
Lock in period is of 3 years old and during this period you can not sell these units, however, dividend payments will be paid in the middle, Lockin is short on ELSS compared to other tax savings tools like Public Provident Fund, Fixed Deposit, and Kisan Vikas.
5.Guarantee on ELSS returns
There is no guarantee on the investments in ELSS, since we these are based on markets in a span of long time or long term markets given profits are more important, like in stock market we can’t sell it to others so there is no chance of risk on long term.
6.How to get returns from ELSS?
ELSS is a long term based tax exempted scheme to attract the investors by central government to not to deduct tax and to generate wealth for the investor on long term basis.
The net worth of ESSSS net you have invested suppose Rs.30, if you have Rs.1.5 lakhs, the amount will be invested and obtain 5,000 ELSS units, if you’re in the maximum tax bracket, you can get 30 percent of your investment exempted from tax, for example you may think that cess and surcharge are exempted.
According to above example is Rs. 45,000 tax exemption is available on 1,50,000rupees, that means your affected investment in ELSS is Rs. 1,05,000 only, over the past three years, ELSS funds have an average annual revenue of 13.8 per cent, the annual return is 13 percent, the NAV of the units you purchased will be of Rs. 43, that is Rs. 1,05,000 .. Will grow to Rs. 2,16,000, that means your net investment has doubled in three years.
If the market is good then in the span of three years the investment of the investors will be doubled, so this is called market based mutual fund.