With the financial year set to end on March 31st, we will soon see taxpayers rushing to invest in tax-free financial instruments to claim tax deductions. In addition to term insurance, NSC, PPF, NPS, retail investors can also invest in his ELSS mutual fund.
Equity Linked Savings Scheme (ELSS) mutual funds have a lock-in period of three years and provide equity exposure while offering tax benefits to investors.
Under Section 80C of the Income Tax Act, investors are entitled to claim up to income tax exemption. INR1,50,000 for investment in ELSS Fund.
Deepak Agarwal, a Delhi-based chartered accountant, said, “Moderate to high risk oriented investors may want to consider ELSS as a viable investment option. ELSS helps in income tax savings.'' Not only that, but it also promotes wealth creation.”
There are a total of 42 ELSS mutual funds with total asset value. INR2.04 billion. These mutual fund schemes, as a category, achieved his one-year return of 37.83% in the past year. Over the past two years, this category has delivered an annualized return of 19.50%. Lucifer Data is current as of February 22, 2024.
Also read: Mutual Funds: How to open a SIP account online? Step-by-step guide
If you are planning to invest in an Equity Linked Savings Scheme (ELSS) after redeeming your current equity investment, make sure to be aware of the following important provisions.
5 important regulations you need to know
1 If you sell an equity investment purchased less than 1 year ago before 31 March 2024, the capital gain will be taxed according to short-term capital gains (STCG) tax.
2. If the current equity investment is more than one year old and redeemed before March 31 of this year, the gain will be taxed as per Long Term Capital Gains (LTCG) tax provisions i.e. at the rate of 10. percent. If you apply for indexing, the applicable tax rate will be 20 percent.
Also Read: 9 Best ELSS Mutual Funds to Buy in 2024.check here
3. LTCG is applicable only if the profit from stock investment in one financial year exceeds 20 billion yen. INRHundred thousand.
4. If you want to avail the tax deduction for the current financial year, you must invest in one of the ELSS schemes by March 31, 2024.
5. If you have invested in ELSS schemes more than three years ago, you can redeem them and reinvest the proceeds before the end of the financial year in order to claim tax benefits for the current financial year.
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Published: February 26, 2024, 9:03 AM IST
