ELSS Funds for The Uninitiated. They’re Not Just for Tax Savin | Credclub

ELSS Funds for The Uninitiated. They’re Not Just for Tax Saving

An Equity Linked Savings Scheme (or ELSS) is a form of a mutual fund that helps individuals reduce the amount of money they spend on taxes (Section 80C of the Income Tax Act). Tax deductions permissible can amount to up to ₹1.5 lakhs permitting savings of up to ₹46,800 in a year.

Features and Benefits

- Those who avail of this scheme can take advantage of the capital appreciation it allows for.
- As open-ended investments, over 65% of the funds provided are invested in equities.
- Funds provided are locked in for a period of three years active from the date of units being provided and cannot be retrieved during this time.
- Returns on offer under ELSS’s tend to be comparatively better than other plans.
- There are no limits on the amount an individual can invest in an ELSS.
- A fund manager is responsible for managing money rather than the investors themselves.

Clearing Misconceptions

Investors can choose to have their funds allocated towards dividends in which case they are paid the same. Else, funds can be allocated towards growth where money is reinvested to generate funds until redemption.