Why ELSS is best tax saving investment: 

ELSS have many benefits over the other products available for tax exemption under section 80C.  It has benefit of tax exemption as well as returns based on equity market. In the past its returns are highest in comparison to other products. The capital gains on the sale of ELSS are also exempt. Investors find that ELSS is best tax saving investment.

What is ELSS:

ELSS stands for equity linked saving scheme. It is a type of mutual fund meant for the long term investment. ELSS invest 65% of their funds in equity. They are notified for the tax exemption in section 80C. 

How to invest in ELSS:

It is very simple to invest in ELSS. First of all choose your fund and download form. If you are already KYC compliant you can invest directly. If not them you will also have to fill and submit the KYC form. 

Lump sum:

You can invest a lump sum amount in ELSS. Many investors put their money into tax saving products at the end of year. It is simple to invest. If you have already invested in ELSS you can have online access and can make further investments online as and when you need.

SIP 

Its stands for systematic investment plan. Most of experts suggest the disciplined investment. In SIP you can give standing instruction to your fund to deduct and invest a fix amount. This investment can be on a fix date of every month. This method of investment captures the various levels of market ad is more scientific.

Taxation of income of ELSS: The investment in ELSS are eligible for exemption under section 80C. Let us see how it will benefit. The amount invested in ELSS will be deducted from the Gross total income.

Let us assume the Gross total income of an investor is Rs.10 lac and he invest Rs. 50,000 in ELSS. His taxable income will be Rs.10 lac less Rs.50,000. He will be required to pay tax only on Rs. 9,50000. 

Benefits of ELSS: 

ELSS is one of the fastest moving product. With the fall in RBI interest rates in 2016 and 2017 it has become even more lucrative. The returns on other products has fallen substantially.

Least Lock -in period among all section 80C products:

ELSS has lock-in period of three years. It is least in comparison to all other products. Tax saving FD pf banks having a lock-in of five years. Other investments like NSC or PPF have even longer  the lock-in period. 

Tax free gains:

The gains in ELSS are not only eligible for 80C but the capital gain arising on their sale are also exempt. It should be taken care to choose the growth option while investing. In case of dividend option the amount of dividend will be exempt but the mutual fund house will be required to pay the DDT. 

Equity linked returns:

ELSS have equity linked returns.This will make you returns higher. In current scenario it is even more relevant as the interest rates are falling. After demonetization in India there is  scope of further reduction in interest rates.

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