Starting SIPs in ELSS Mutual Funds is a straightforward way to grow your money while enjoying tax benefits under Section 80 (C) of Income Tax. Let’s break it down in simple terms:
SIP and ELSS – What’s the Deal?
SIP Investments
You can easily invest your money through SIP in different types, like stocks or mutual funds. But, here, we will focus on SIPs in a specific Mutual Fund scheme type called ELSS (Equity Linked Savings Scheme).
ELSS Explained
ELSS is a special category of equity mutual funds that provide tax benefit under 80C with a minimum investment duration of 3 years. In ELSS Mutual Funds, the majority of money is invested in equities and other linked securities. Please note that this tax benefit is only available if you are filing the tax returns under the old tax regime.
Catch: There’s a catch, though – once you start, your money is locked in for three years. During this period, you can’t take out any cash. But hey, this lock-in also makes you eligible for tax deductions upto Rs. 1.5 lacs under Section 80 (C) of the Income Tax Act if you are filing returns under the old tax regime.
Also check our detailed blog on ELSS.
Saving Tax Through SIP in ELSS – The Simple Steps
Count Your Money: See how much money you can spare for your investment.
Consult an Investment Expert: With so many ELSS funds around, it can be confusing. Consult our investment expert to choose the right ELSS fund suited to your requirements.
Sign Up and get Started: You can sign up on My Money Panda, check our ELSS Basket, and get started early.
Frequently Asked Questions:
1) Are SIP investments eligible for tax deductions?
SIPs in ELSS funds are eligible for the tax deductions under section 80(c) section of the Income Tax Act.
2) Is there a maximum limit for tax-saving SIP investments?
Through ELSS investments, you can avail a maximum tax deduction of Rs 1.5 lakh under section 80(c) section of the Income Tax Act.
3) What are the tax implications when an investor withdraws SIP investments?
When you withdraw money from SIP investments, including ELSS funds, you are required to pay taxes on capital gains only on redemption. For ELSS funds, you can redeem the investments after 3 years and the long term capital gains would be 10% + surcharge & cess.
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