Equity Linked Savings Scheme (ELSS) is not just a tax-saving investment; it’s also a powerful wealth-building tool. Here’s why ELSS stands out as one of the best options for investors in FY 2024–25:
1. What is ELSS?
- A mutual fund category regulated by SEBI.
- Requires 80% investment in equities, balancing growth and stability.
- Offers potential for higher returns compared to traditional instruments.
2. Impressive Returns
- Some ELSS funds delivered up to 59% returns in the last year.
- Equity exposure allows for long-term wealth creation alongside tax savings.
3. Shortest Lock-In Period
- Only 3 years compared to:
- Fixed Deposits (FDs): 5 years
- Public Provident Fund (PPF): 15 years
- Provides flexibility to withdraw or stay invested for further growth.
4. Tax Deduction Under Section 80C
- Claim up to ₹1.5 lakh deduction from taxable income every year.
- Reduces overall tax liability while boosting wealth creation.
5. Lower Long-Term capital Gains (LTCG) Tax
- Returns up to ₹1.25 lakh per year are tax-free.
- Gains above this attract only 12.5% LTCG tax, much lower than income tax slabs.
6. The EEE Advantage
- Exempt-Exempt-Exempt (EEE) status:
- Investment amount qualifies for exemption.
- Returns (up to LTCG limit) are tax-free.
- Maturity amount is also tax-free.
7. Easy Entry & SIP Option
- Start with as little as ₹500.
- SIP (Systematic Investment Plan) allows gradual investment and benefits from compounding.
8. Better than Traditional Tax-Saving Tools
- Higher returns due to equity exposure.
- Shorter lock-in than FD/PPF.
- Dual benefit: Tax savings + Wealth growth.
Final Word
ELSS is perfect for taxpayers seeking high returns, tax deductions, and flexible investment options. A SIP approach and long-term horizon make it even more rewarding.
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