Equity Link Saving Scheme (ELSS)

What is ELSS

ELSS – Equity Link Savings Scheme is similar to a Diversified Equity Fund. It is a type of mutual fund that qualifies for tax exemption under section 80 C.  

ELSS = Tax Saving + Growth Potential

•The returns from ELSS depend on the stock market and hence tend to be volatile, but then they are generally higher than the returns generated from traditional tax saver instruments.

Benefits

•Lock In Period in ELSS is less as compared to Lock In Period of other Tax Saving Instruments available.

•Returns Earned are Tax Free.

•In the current economic scenario only Market Returns can help individual to beat inflation. As ELSS is based on market linked returns, so it gives an opportunity to get higher returns than the rate of inflation.

•ELSS has an option of dividend payout. With this option whenever the fund (ELSS) declares dividend the customer also receives the respective amount as dividend which are tax free

•ELSS has an option of investing through SIP. So a customer can start investing in ELSS even with small amount of Rs. 500.

Instrument Name Lock in Period Expected Returns Tax Treatment at MaturityEquity Link Saving

Scheme (ELSS)

3 Years Market Returns Tax Free

Unit Link Insurance Plan 5 Years Market Returns Tax FreePublic Provident Fund

(PPF)15 Years 8.6% P.A Tax Free

Employee Provident Fund

(EPF)

Deducted From Basic Salary

9.5% P.A Tax Free

National Saving Certificate

(NSC)

6 Years 8.16% P.A Interest Taxable as per other Income

Fixed Deposit -Tax Saving F. D

5 Years 8.25% P.A Interest Taxable as per other Income

Life Insurance Premiums 5 Years Depends on the policy

Tax Free

Agriculture & Rural Development Bonds

5 Years 8% - 8.75% P.A Interest Taxable as per other Income

Senior Citizen Saving Schemes

3 Years (Can be extended to 5

Years)

9% P.A Interest Taxable as per other Income

Investment options under Section 80C

Characteristics

•Investment Pattern: Usually mutual funds invest 100% of the

corpus in equity and equity related securities.

•Investment Objective: Long-Term Capital appreciation.

•Net Asset Value: Calculated & Declared on every working day

•Application Amount: Minimum 500 & in Multiple of 500

thereafter no cap on the maximum amount. However investments

only up to 1 Lakh qualify for the deduction under the section 80 C

•Entry & Exit Load: No Load

•Switching Option: Available only after the expiry of the Lock

In period of 3 Years.

•Liquidity: The amount cannot be withdrawn before 3 Years

ELSS

Dividend OptionGrowth Option

Under the Growth option, the investor will Not get any income during the tenure of investment. At the time of

redemption, the investor get lump-sum Amount

Dividend Reinvested

Dividend Payout

Under this plan, If the scheme declare a dividend, the investor will

Receive dividend income

Under this scheme, the dividend declared by the scheme is reinvested on behalf of

the investor at the prevailing NAV on the day of dividend. Investor can claim additional Tax benefits on reinvested

Dividend Amt.

ELSS Investment Options

Thank You