Is ELSS better than other mutual funds?
You cannot compare an ELSS with a mutual fund. An ELSS is also a mutual fund that offers tax deductions of up to Rs 1,50,000 a year under Section 80C of the Income Tax Act, 1961. The only difference between an ELSS and other mutual funds is that the later doesn’t offer tax benefits.
How is ELSS different from mutual funds?
An equity-linked savings scheme (ELSS) is a tax saving mutual fund. It is a fund in which you can invest like in the case of any other mutual fund. The only difference is that these funds are subjected to a lock-in period of 3 years and offer tax exemption under Section 80C of the Income Tax Act.
Which is better ELSS or index fund?
On the other hand, index funds are generally open-ended schemes and are relevant for those investors who prefer a passive style of investing. We would recommend investors to prioritize ELSS as it is the only tax saving instrument which has the shortest lock-in period.
What is better than ELSS?
You can invest as much as you want. However, under Section 80C of the Income Tax Act, only ₹150,000 in a financial year is deductable. From the table above, you can see that a PPF investment is a relatively safer option. However, PPF offers much lower returns over a longer time horizon than ELSS.
How do I withdraw ELSS SIP before 3 years?
The simple answer is that you cannot withdraw your ELSS before the lock-in period. However, you can choose to get a loan against mutual funds (LAMF) if you want to fulfil an urgent need for funds. Many lenders allow you to keep your mutual funds as a collateral for a loan.
How do I move from one ELSS to another?
ELSS mutual funds have a mandatory lock-in period of 3 years. You can switch from the regular plan of an ELSS mutual fund to the direct plan after the lock-in period of 3 years. This means that switches and redemptions are not permitted before 3 years.
Can I pause my ELSS SIP?
Yes, it is possible to stop your SIP investments in mutual funds, including your equity linked saving schemes (ELSSs). You just need to fill up the form – the procedure is the same if you have invested offline. If you have invested online, you can visit the funds’ website and cancel your SIP.
How do I redeem my ELSS money?
If you have made your ELSS Mutual Fund investment via the lump sum route, i.e., at one go, all your units will be allotted on the same day. And therefore, once the 3 year lock-in period is over, you can redeem your entire ELSS investment in one go.
Which is better sip or lumpsum in ELSS?
Choosing ELSS will help you maximize tax benefits under Section 80C. Lumpsum investments will be better suited if you are investing at the end of a financial year, or if you have a higher risk appetite. On the other hand, SIPs will be better suited if you want to avert risks and have a steady source of income.
What is the difference between ELSs and a normal mutual fund?
The major difference between ELSS and a normal Mutual Fund is the tax benefit that an investor gets for investing in an ELSS. Key differences-. Lock- in –In ELSS there is a minimum lock-in period of 3 years in any/all ELSS schemes.
What is ELSS (equity linked saving scheme)?
Equity Linked Saving Scheme (ELSS) is a type of Mutual Fund where investments are made in Equity. The major difference between ELSS and a normal Mutual Fund is the tax benefit that an investor gets for investing in an ELSS.
Are ELSS mutual funds liable for tax deductions?
Investments upto INR 1,50,000 in ELSS Mutual Funds are liable for tax deductions from the income, as per Section 80C of the Income Tax Act. Though ELSS is a type of Equity Funds, it offers various unique features that make it different from the usual equity funds.
What is ELSs and how does it work?
Well, as an ELSS is a type of Mutual Fund, they work the same way. Your asset management company will pool your money with that of other investors and invest it across sectors. Hence the name Mutual Fund. You see, a bigger pool of money will attract greater returns, and losses can be spread out too.