Investment proof papers: Are ELSS tax savers best options to go with?

Investment proof papers: Are ELSS tax savers best options to go with?

The unique selling proposition of ELSS is they have delivered up to 20 per cent returns, combined with the merit of their tax-saving abilities for the investors.

At this time of year when you are in a hurry to submitinvestment proofs, we pick the best tax-saving option for you.

Equity-linked saving schemes (ELSS) are diversified mutualfunds and they invest into equities.

They have a lock-in period of three years from the date ofinvestment.

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The unique selling proposition of ELSS is they havedelivered up to 20 per cent returns, combined with the merit of theirtax-saving abilities for the investors.

Another advantage of investing in ELSS is they allow you to claimtax deduction of up to Rs 1.5 lakh under section 80 C.

One would come across many other investment options to savetaxes. But the lock-in period for those products is far more when compared toELSS plans.

While national savings certificate and Public Provident Fund(PPF) don't deliver more than 8.5 per cent returns, your investment in fixeddeposits would not fetch more than 8 per cent returns on an average.

NSC has a six year lock-in period and PPF has 15-year lockin period.

Axis Long term equity fund, Reliance tax saver fund, DSPBlackrock tax saver fund and Franklin India Taxshield fund are some of the toprated ELSS plans in the industry.

In this case we come across an interesting situation whetheryou should invest in lumpsum in ELSS to save taxes with almost 2.5 months to gofor the current fiscal to end?

Experts say while it might be a good strategy to invest inELSS considering their tax-saving and smart returns potential currently, theseplans are meant for the long term.

Sudhir Kaushik, CFO at Tax Spanner said equity linked savingschemes are the best tax-saving investment options at this point of time, whenfiscal is going to end. Some schemes have also delivered up to 15 per centreturns in the past. However, you may not get desired returns if you investmoney in them for three months. Currently, they are good medium to save taxesbut ideally one should invest in such schemes for a longer duration and atstart of a fiscal year to maximise returns.

The ultimate returns of your ELSS plan will depend onwhether you have poured in money  at the right time since no one can timethe markets. The uncertainty of the market movement may drown your investmentor make them grow at a robust rate. Hence, it would be beneficial to investin ELSS plans through systematic investment plans route and get insulated fromthe uncertainties of a volatile market.


Published on: Jan 13, 2017, 4:21 PM IST
Posted by: Aseem Thapliyal, Jan 13, 2017, 4:21 PM IST