ELSS ( Equity Linked Saving Scheme ) is another tax saving instrument along with your regular LIC, PPF etc. It is a type of mutual fund which is qualified for tax exemption under section 80 C, this comes under the overall exemption limit of Rupees One Lakh. It is just like a diversified equity fund where fund managers invest in shares of various companies across various industries. While most saving schemes invest only in safe plans, ELSS also invests a small portion in Equity market instruments to give a higher yields to investors. There is risk associated with this investment but in return it offers you higher returns compared to PPF or NSC.
- ELSS offers twin benefit of Tax saving and capital appreciation.
- ELSS has three years lock-in period, Ensures long term investment.
- SIP (Systematic Investment Plan) is the best way of investing in the mutual funds
- ELSS offers good Return On Investment (ROI)
- Invest upto 1,00,000 in ELSS for getting tax exemption.
Disadvantages Of ELSS
- High Risk factor as compared to NSC and PPF
- Premature withdrawal is not allowed