Why is ELSS tax free?
Since ELSS funds are locked-in for three years, there is no possibility of realising short-term capital gains. Therefore, you can realise only long-term capital gains. These gains of up to Rs 1 lakh a year are made tax-free, and any gains above this limit attract a long-term capital gains tax at 10\%.
Are mutual fund investments tax deductible?
These gains are taxed at a flat rate of 15\%, irrespective of your income tax bracket. You make long-term capital gains on selling your equity fund units after a holding period of one year or more. These capital gains of up to Rs 1 lakh a year are tax-exempt.
Why ELSS is the best tax-saving option?
National Pension System (NPS) and Equity-Linked Savings Scheme (ELSS) are two of the most popular tax-saving investment options under Section 80C of the Income Tax Act, 1961. ELSS is the better of the two as it has the potential to provide higher returns and come with a lock-in period of just three years.
How much tax is deducted from mutual fund?
Short term capital gains (if the units are sold before one year) in equity funds are taxed at the rate of 15\% plus 4\% cess. Long term capital gains tax in equity funds is 10\% + 4\% cess provided the gain in a financial year is over Rs 1 Lakh. Long term capital gains upto Rs 1 Lakh is totally tax free.
How do I get proof of ELSS investment?
Investment Proof: You can get investment proof for mutual fund investments by getting your statements from your distributor. Alternatively you can get a consolidated email statement for all your mutual fund investments, including your ELSS funds emailed to your inbox.
How does ELSS mutual fund work?
Equity Linked Savings Scheme or ELSS Funds are open-ended Equity Mutual Funds that help you save and provide an opportunity to grow money. When almost all equity funds restrain you from paying long-term capital gains tax of 10.4\% up to an amount of Rs. 1 lakh, ELSS mutual funds offer tax benefits.
What are the tax benefits of investing in ELSS?
Investors can claim tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. All ELSS funds qualify for the tax deduction under Section 80C. Some solution-oriented funds like – retirement savings funds also give tax benefits but with a longer lock-in period.
Which ELSS funds qualify for the tax deduction under Section 80C?
All ELSS funds qualify for the tax deduction under Section 80C. Some solution-oriented funds like – retirement savings funds also give tax benefits but with a longer lock-in period. Investments in NPS qualify for exclusive tax deduction under Section 80CCD (1B).
What is ELSS (equity linked savings scheme)?
ELSS or Equity Linked Savings Scheme is a type of diversified equity mutual fund that is qualified for tax exemption under Section 80C of the Income Tax Act. Most investors prefer to invest in this mutual fund instrument as it offers capital appreciation and tax benefits as well.
What are supporting documents for ELSS funds?
Supporting documents have to be provided by the policyholder to claim deductions. What are ELSS Funds? ELSS or Equity Linked Savings Scheme is a type of diversified equity mutual fund that is qualified for tax exemption under Section 80C of the Income Tax Act.