How do I choose my ELSS fund?
How to select the right ELSS fund and create wealth
- Market Cap Composition Of The Portfolio.
- Understand The Concentration Risk And Over-diversification.
- Check The Expense Ratio Of The ELSS Fund.
- Check The Basic Parameters.
- Compare The ELSS Fund With Other Equity Funds You Have Invested.
- Finally.
How do you declare ELSS in income tax?
If you are investing in an equity-linked savings scheme (ELSS) to claim the tax benefit under section 80C of the Income-tax Act, 1961, then do make sure that you have invested marginally more than the specified limit of Rs 1.5 lakh in a financial year.
Which tax savings ELSS is better?
The table below shows the top-performing ELSS mutual funds based on the past five year returns:
| Mutual fund | 5 Yr. Returns |
|---|---|
| SBI Tax Advantage Fund Series II Growth | 25.25\% |
| SBI Long Term Advantage Fund Series IV Regular Plan Growth | — |
| BOI AXA Tax Advantage Fund Regular Growth | 20.95\% |
| BOI AXA Midcap Tax Fund Series 1 Direct Growth | — |
What is ELSS interest rate?
NSC vs ELSS
| Features | NSC | ELSS |
|---|---|---|
| Maximum investment which can be claimed as tax deduction | Rs 1 lakh | Rs 1 lakh |
| Period | 5 and 10 years | 3 years |
| Risk factor | Low risk | High risk, depending on markets |
| Interest rate | 8.5\% per annum for 5 year term and 8.8\% per annum for 10 year term | No fixed interest rate |
How do I claim my ELSS 80C deduction?
Should expense ratio be high or low?
A good expense ratio, from the investor’s viewpoint, is around 0.5\% to 0.75\% for an actively managed portfolio. An expense ratio greater than 1.5\% is considered high. The expense ratio for mutual funds is typically higher than expense ratios for ETFs.
What are the tax benefits of investing in ELSS funds?
As per the SEBI regulations, ELSS funds have to invest at least 80\% of their corpus in equity or equity related instruments. These funds come with a lock in period of 3 years and qualify for tax deduction under Section 80C. Investments in ELSS of up to Rs 1.5 lakh per financial year can be claimed as tax deduction under this Section.
Why ELSS funds are better than other section 80C instruments?
Hence, being invested in equities, ELSS funds have the potential to generate higher returns other Section 80C instruments like Public Provident Fund (PPF), National Savings Certificate (NSC) and tax saving bank fixed deposits over the long term.
Should you choose a new ELSS scheme?
Many investors choose a new ELSS when their old tax saving scheme is not performing well for a year or two. This may result in several schemes in a mutual fund portfolio. In fact, many mutual fund investors eventually own more than half a dozen ELSS funds in their portfolio.
Which is the best tax saving investment option?
ELSS funds are the best tax saving investment option. They fall under the diversified equity category as they invest 80\% of their assets in equity and equity related instruments. These tax savings mutual funds qualify for tax exemption of INR 1.5 lakh under section 80C of the Income Tax Act, 1961.