Earning good returns from the investment is every investor’s priority, but tell me, if the investor gets an option to earn a good return, along with the benefit of tax saving option on their return, by investing in tax saving funds, what will happen?
Okay let me guess, it might happen, people who are not investing, may start investing in tax-saving funds or investor who already, is investing, may switch their investment to tax-saving funds scheme, but for investing in tax saving funds, one must know about the best recommended tax-saving funds for the financial year 2020.
Well, there are many tax-saving schemes as per Section 80 C, that are available in the market to invest, like PPF (Public Provident Fund), NPS (National Pension Scheme), ELSS (Equity Linked saving Scheme) mutual fund and many more, out of these, ELSS mutual fund is the most recommended, tax-saving funds by financial advisors.
Today we are here with the best-recommended ELSS tax saving Mutual funds for the financial year 2020, where you can consider your investment, and ear a good return along with the tax benefits on your earned returns.
What is ELSS (Equity Linked Saving Scheme)?
ELSS or Equity-linked Saving Scheme is a kind of close-ended, equity fund, offered by Mutual Fund. ELSS funds are favored, for its prominent tax-saving features. As per the Section 80C of Income Tax Act 1961, these funds offer tax benefits on the returns earned by the investors, investing in ELSS funds.
ELSS funds come with a lock-in period of three years, that investors investing in ELSS, cannot redeem their fund period a period of three years, but this is also significant point for ELSS funds, because if we look at lock-in period of other tax-saving funds, then it is much more than ELSS, like in PPF, the lock-in period is 15 years, whereas, in NPS, the lock-in period is till your retirement.
Taxation in ELSS (Equity Linked Saving Scheme)
As per SEBI (Security Exchange Board of India) and Section 80C of Income Tax Act 1961, investments of only up to Rs 1.5 lakh, in ELSS, are tax-exempt, if any investor exceeds this limit, they won’t be qualified to avail the tax benefits under Section 80C.
However, the Long-Term Capital Gains on ELSS, up to Rs 1 lakh per annum, is exempted from tax, also, the dividend received is tax-free in the hands of investors.
Who Should Invest in ELSS (Equity Linked Saving Scheme)?
Any investor who is willing to invest and earn good returns along with that, also planning to save money, through tax planning, investing in ELSS for those investors, is the best option to consider, at the same time these investors should also, prepare themselves for the market-linked risks, as ELSS funds are equity diversified with a major portion of the fund being invested in equity & related products.
Benefits of investing ELSS (Equity Linked Saving Scheme)
- ELSS funds are close-ended equity funds and its returns are based on market performance, hence, its returns are higher than other tax saving schemes, in longer runs.
- ELSS comes with a lock-in period of three years, which is comparably short than other tax-saving investments.
- ELSS funds offer both types of investment methods, SIP (Systematic Investment Plan) and Lump-Sum, it is up to an investor, which method they want to go with.
- ELSS offers the option of professional management of funds, which helps investors to reduce the risk on their portfolio and enhance the returns on the investment.
Top Performing ELSS Tax Saving Mutual Funds
We have prepared a list of best-recommended ELSS tax-saving funds, for the financial year 2020, after a good analysis of different ELSS mutual funds. These funds have been selected on the basis of their past returns and performance.
As of now, you are aware of the best forming tax saving mutual funds for the financial year 2020, so plan your investment in these funds, and enjoy the benefits of good returns, along with tax saving features. It is always suggested to invest in tax saving ELSS funds, in an early stage of your career so that your money grows over time and you earn better returns.
Most importantly, always consult a financial planner or advisor, before starting your investments. They will help you select the best fund, for your investments as per your requirement.
You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).