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Expand ELSS and give some brief description about this?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Renju M.R asked over 2 years ago

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered over 2 years ago

> Expand ELSS and give some brief description about this? --ELSS stands for Equity Linked Savings Schemes (ELSS). --Equity Linked Savings Scheme (ELSS) was floated as per the ELSS guidelines issued by CBDT under section 80C of the Income Tax Act 1961 to encourage investments in equities by providing tax rebate. The amount, up to Rs 1.5 lakhs (For the current FY), if invested in ELSS is exempted from tax. --Investors who invest in ELSS are investing in a scheme where minimum 80% of the invested amount can be in equities and equity related securities. Therefore, it is at par with any diversified equity fund. ELSS investments come with a three years lock in period where the long term capital gains and dividends are tax free. The lock in period is only three years making it the option with the shortest lock in period in tax saving options. `Benefits of ELSS`: **Saves Tax:** By investing Rs. 1.5 Lakhs in ELSS mutual funds, you are eligible for tax exemption under SECTION 80C. **Lowest Lock-in Period:** ELSS mutual funds come with lock-in period of 3 years. As visible in earlier table ELSS has the least lock in period compared to other 80C options. **Tax free Returns & Dividends:** If you observe, none of the returns from tax saving investment options other than PPF, ELSS and ULIP are tax free. NSC, Tax Saving Bank FD, Tax saving Post office scheme etc. all these tax saving options’ returns are taxable based on individual tax slab. However, interest on Public Provident Fund is tax free, but that comes with a 15 year lock-in period (apart from certain exemptions to withdraw in between). The only tax saving investment option that provides tax free returns for short period is ELSS Mutual funds. **Growth of Equity:** Since an ELSS mutual fund invests in equity related instruments, these schemes would help you to grow your money when the stock market grows over a period of time.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Urmil answered over 2 years ago

ELSS stands for Equity Linked Savings Schemes (ELSS), It is one of the options that are present in the list of investments under Section 80C. The core of the entire ELSS investment is that this is equity oriented and the entire amount that goes towards this area gets an equity exposure. This means that there is a different kind of risk that is present here as compared to say a Public Provident Fund (PPF) investment or a National Savings Certificate (NSC) because the asset class is not the same. In a debt investment there is usually a higher confidence of the safety of the capital invested especially in case where this is a government backed instrument. On the other hand when it comes to an equity exposure it is the management of the money that is very significant and due to this reason there has to be additional care taken in the investment process

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 HIMANSHU answered over 2 years ago

ELSS stands for Equity Linked Savings Schemes (ELSS), It is one of the options that are present in the list of investments under Section 80C. The core of the entire ELSS investment is that this is equity oriented and the entire amount that goes towards this area gets an equity exposure. This means that there is a different kind of risk that is present here as compared to say a Public Provident Fund (PPF) investment or a National Savings Certificate (NSC) because the asset class is not the same. In a debt investment there is usually a higher confidence of the safety of the capital invested especially in case where this is a government backed instrument. On the other hand when it comes to an equity exposure it is the management of the money that is very significant and due to this reason there has to be additional care taken in the investment process. There is a lock in that is present in the ELSS fund which is at 3 years.

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Open uri20170510 32134 ivjxpn?1494421728 Shreedhar Sutar answered over 2 years ago

Hi Renju M.r, ELSS stands for Equity Linked Savings Schemes (ELSS), It is one of the options that are present in the list of investments under Section 80C. The core of the entire ELSS investment is that this is equity oriented and the entire amount that goes towards this area gets an equity exposure. This means that there is a different kind of risk that is present here as compared to say a Public Provident Fund (PPF) investment or a National Savings Certificate (NSC) because the asset class is not the same. In a debt investment there is usually a higher confidence of the safety of the capital invested especially in case where this is a government backed instrument. On the other hand when it comes to an equity exposure it is the management of the money that is very significant and due to this reason there has to be additional care taken in the investment process. There is a lock in that is present in the ELSS fund which is at 3 years.

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