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Tax planning may seem like a tedious exercise requiring lot of efforts that may make an ordinary investor
nervous at the first glance. Equity Linked Savings Scheme (ELSS) offers a simple way to get tax benefits and
at the same time get an opportunity to gain from the potential of Indian equity markets.
What is ELSS?
Simply put, ELSS is a type of diversified equity mutual fund which is qualified for tax exemption under
section 80C of the Income Tax Act, and offers the twin-advantage of capital appreciation and tax benefits. It
comes with a lock-in period of three years.
Why should one invest in an ELSS?
ELSS funds are one of the best avenues to save tax under Section 80C. This is because along with the tax
deduction, the investor also gets the potential upside of investing in the equity markets. Also, no tax is
levied on the long-term capital gains from these funds. Moreover, compared to other tax saving options,
ELSS has the shortest lock-in period of three years.
BEYOND TAX SAVING
Parameter
PPF
NSC
ELSS
Tenure
15 years
6 years
3 years
Returns
(Compounded
Annually)
8.80 % ^
(Compounded
Not
assured
half-yearly)
dividends/ returns
8.60 to 8.90 % ^
Minimum
investments
Rs.500
Rs.100
Rs.500
Maximum
investments
Rs.1,50,000
No limit*
No limit*
Rs 1,50,000
Rs 1,50,000
Safety/ Rating
Highest
Taxable
Highest
Dividends
and
capital gain tax free
High Risk
* There is no upper limit on investments. However, investments of only upto Rs.100,000 per year are allowed to be
claimed as deductions under Section 80C of IT Act.
Tax woes often make life seem like a burden. Dont we all just wish our hard earned money
would be ours, to invest for the future, without worrying about tax? This is why SBI Mutual
Fund presents SBI Tax Advantage Fund Series - II, a 10 year close ended Equity Linked
Saving Scheme, for investors who wish to address two critical issues: tax planning and wealth
creation.
Tax Saving through ELSS
ELSS (Equity Linked Savings Scheme) are diversified equity funds with a lock - in period of
3 years.
These funds offer tax benefits (Individual /HUF) under Section 80C of Income Tax Act, 1961
according to which, investment up to Rs 1 lakh in ELSS is deductible from taxable income.
Illustration: It helps in saving considerable amount of taxes if planned efficiently.
All figures are in rupees. (The tax calculations shown above are as per the IT slab applicable to General Individual/ HUF assessee
for FY 2011-12 exclusive of cess & surcharge.)
Investing
in
ELSS
A smart tax plan can generate incremental returns on the investments along with tax saving
benefit. There are various tax saving investment options available. In order to optimize the
benefits it is crucial to analyze the available options & selecting the one which suits your
need. Lets have a look at these options in detail.
Fund Facts
Fund Type
Minimum Investment
Options
Liquidity
Benchmark
BSE 100
Fund Manager