The tax season is almost ending, and this year we have been getting a lot of queries on tax-saving and ELSS (equity-linked savings scheme) funds. We decided to answer the common ones to help you with your tax-saving journey:
Q. Why should I choose to save tax with ELSS?
A. There are 2 reasons for this:
- Lock-in period - This has the shortest lock-in period of just 3 years. This means, unless you choose to stay invested to reach your long term goals, the money can be withdrawn after completion of the lock-in.
- Best returns - Compared to other options like PPF, 5 year FDs etc, ELSS funds have been yielding Inflation-beating returns which will not only save tax but also grow your wealth at the same time.
A. Here are a few steps you can follow to invest in ELSS funds:
- Evaluate your other investments & commitments. Calculate the amount of tax you need to pay and how much can be saved
- Search for the best mutual funds in the market that fall under 80C
- Complete filling up the forms and do your KYC if you have not invested in mutual funds earlier
- Choose between one-time lumpsum investment and automated monthly payments
- Start investing
Q. Should I re-invest in ELSS funds every 3 years to claim my tax?
A. No. You have to invest in ELSS funds every year to claim tax benefits for that particular year.
Q. What do I do next?
- Submit the proof to your HR and complete your tax-saving process
- Try and stay invested in them as much as possible. As ELSS funds work the same way as equity funds, the longer you stay invested, the better. You can plan your financial goals accordingly
- Make sure you invest early next year so that the last minute rush can be avoided
Q. Is there an easy way to invest in tax-saving ELSS funds?
A. Choose Scripbox! The Scripbox Tax Saver Plan will help you calculate your taxes, invest in the best ELSS funds with a 100% paperless process, and give you the investment proof on the next business day!
Doesn’t that make tax-saving so much easier? Start now!