What are Tax Savings/ELSS Funds
Tax Savings/ELSS Funds, also known as Equity Linked Savings Schemes, are mutual funds that offer tax benefits under Section 80C of the Income Tax Act in India. These funds primarily invest in equities, giving investors an opportunity to participate in the growth potential of the stock market. With a lock-in period of 3 years, these funds encourage long-term investment horizons and promote wealth creation.
Features of Tax Savings/ELSS Funds
Equity-focused investments
Short lock-in period
Long-term gain
Benefits of Investing inTax Savings/ELSS Mutual Funds
Potential for optimised returns
Tax-saving potential
Flexibility and liquidity after lock-in
Lower tax on gains
Who Should Invest inTax Savings/ELSS Funds
Conservative InvestorsBalanced funds with a moderate allocation to equities.
Moderate InvestorsGrowth-oriented funds that offer a balanced approach to tax benefits and potential growth.
Aggressive InvestorsEquity-heavy funds for maximum tax savings and wealth creation potential.
Top Performing mutual funds
| Scheme Name | 5 Y | Value Research | ||||
|---|---|---|---|---|---|---|
 Quant ELSS Tax Saver Fund - Direct (G) | 32.31% | Invest Now | ||||
Quant ELSS Tax Saver Fund - Direct (IDCW) | 32.26% | Invest Now | ||||
Quant ELSS Tax Saver Fund - Regular (IDCW) | 30.30% | Invest Now | ||||
Quant ELSS Tax Saver Fund - Regular (G) | 30.23% | Invest Now | ||||
FAQs
What is the lock-in period for Tax Savings/ELSS Funds?
The lock-in period for Tax Savings/ELSS Funds is three years, starting from the date of investment. This means that investors cannot redeem their investments before the completion of the lock-in period.
Can I switch between different Tax Savings/ELSS Funds?
Yes, many fund houses provide the option to switch between different Tax Savings/ELSS Funds. Investors can switch their investments from one fund to another within the same fund house. However, it is essential to consider the exit load, tax implications, and investment objectives before making any switches.
Can I invest more than the maximum limit of ₹ 1.5 lakhs in Tax Savings/ELSS Funds?
While there is no upper limit on the amount you can invest in Tax Savings/ELSS Funds, the maximum limit for tax deductions under Section 80C of the Income Tax Act is ₹ 1.5 lakhs. Therefore, only the investment amount up to ₹ 1.5 lakhs is eligible for tax deductions.
Are Tax Savings/ELSS Funds subject to market risks?
Yes, Tax Savings/ELSS Funds invest primarily in equities, which are subject to market risks. The value of these funds can fluctuate based on the performance of the underlying securities. It is important to consider your risk tolerance and investment horizon before investing.
Can I redeem my investment before the completion of the lock-in period?
No, investors cannot redeem their investments in Tax Savings/ELSS Funds before the completion of the three-year lock-in period. Once the lock-in period is over, investors have the flexibility to redeem their units or continue investing.