Planning taxes is an integral part of everyone’s financial planning. We often keep searching for the efficient tool through which we can save tax. Well, have you ever thought whether investing in a mutual fund can be beneficial in saving your tax? Are there any mutual funds which are specially designed for saving tax? Have a look at these points which will help you know how you can save your tax by putting your money in mutual fund.
Have you heard about ELSS? It is one of the popular tax saving mutual funds which helps in creating wealth over the longer term.
Mutual funds come with a huge tax benefit and high returns for their savvy investors. In fact, these kinds of funds are considered to be one of the best tax saving vehicles and are the need of the hour.
Tax saving is the primary reason why investors head towards mutual fund schemes. ELSS schemes promise to give multiple mutual fund tax benefit irrespective whether you have invested in ELSS as SIP or lump-sum.
- They provide with a huge tax benefit and high returns for their investors. As it comes with the biggest benefit to investing up to a limit of Rs 1.5 Lakhs and is tax-free under the Section 80 C of the Income Tax Act, it helps you in lowering your taxable income and your tax liabilities by investing in ELSS funds.
- The returns which are generated from the scheme remains invested till the lock-in period. After the lock-in period is over, the returns which you avail are called as Long-Term Capital Gains and become tax-free. As it is an equity-oriented scheme; your money gets the growth over the potential of equities.
- While investing in ELSS, many investors opt for the option of the dividend. The dividend income which you receive from ELSS is also tax-free.
Other than ELSS, equity mutual funds are the second best tax saving mutual funds option with a lock-in period of one year. The returns received after selling the equity mutual funds after one year is treated as long-term capital gain and are tax-free. Also, the dividends you get from equity mutual funds are tax exempted.
Many of us are not aware that, ELSS is one of the safest ventures regarding the cost impacts with relatively small lock-in period as compared to that of the fixed deposit and national savings certificate where the minimum period is five years. ELSS helps you circulate your money among small, mid and large-cap stocks. It is more beneficial to the youngsters and who wish to save tax.
Isn’t it a great alternative to invest in mutual fund tax benefit schemes? Hurry up and look forward to investing in mutual funds.