tax saving investment
TRANSCRIPT
TAXSAVER HAS
GROWN 93^ TIMES
IN 18 YEARS
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“The hardest thing in the world to understand is the income tax.”
ELSS are mutual fund scheme & are
quite similar to diversified equity funds of
Mutual Fund.
As the name suggests, the scheme
primarily invests in equity market by buying
equity stocks of companies listed on the
stock exchanges.
The units of the scheme are offered at
the NAV (Net Asset Value).
The NAV is announced for all
business days and keeps changing
primarily depending upon the movement in
the prices of stocks held in the portfolio of
the scheme.
ELSS Mutual Fund
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Equity Linked Savings Scheme
(ELSS) offers a simple way to get tax
benefits and at the same time get an
opportunity to gain from the potential of
Indian equity markets.
ELSS is a type of diversified equity
mutual fund which is qualified for tax
exemption under section 80C of the
Income Tax Act, and offers the twin-
advantage of,
capital appreciation and
tax benefits.
It comes with a lock-in period of three
years.
Earn Money Save Tax
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Comparison of various tax saving instruments
Investment
Avenue
%
Return
Min
Investme
nt
Max
Investmen
t
Lock in
Period
Feature
National Saving
Certificate
8 Rs.100 No limit 6 years Interest is taxable
Public Provident
Fund
8 Rs.500 Rs.70,000 15 years Tax Free Return
Time Deposit 6.25-7.5 Rs.200 No limit 5 years
(to avail 80C
benefit)
Interest is taxable
Senior Citizen
Saving Scheme
9 Rs.1000 Rs.15 lakh 5 years
(to avail 80C
benefit)
Minimum age is 55
to avail this option
Equity Linked Saving
Scheme
Market
driven but
one can
expect 15-
17% return
Rs.500 to
Rs.5000
No limit 3 years Lowest Lock in
period with
maximum Possible
Return
* Apart from these, insurance premium on life insurance policies and principal
component of housing loan are also eligible for Section 80 C benefit.
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Why should one invest in an ELSS?
ELSS funds are one of the best
avenues to save tax under Section 80C.
This is because along with the tax
deduction, the investor also gets the
potential upside of investing in the equity
markets.
Also, no tax is levied on the long-
term capital gains from these funds.
Moreover, compared to other tax
saving options, ELSS has the shortest
lock-in period of three years.
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ELSS Investment Option
ELSS
Dividend OptionGrowth Option
Dividend Payout Dividend ReinvestedUnder the Growth option, theinvestor will not get anyincome during the tenure ofinvestment. At the time ofredemption, the investor getlump-sum Amount
Under this plan, if the schemesdeclare a dividend, the investorwill receive dividend income
Under this scheme, the dividenddeclared by the scheme isreinvested on behalf of theinvestor at the prevailing NAV onthe day if dividend. Investor canclaim additional tax benefits onreinvested dividend amount.
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In SIP, you invest a certain amount each
month in a fund.
It’s an effective way of investing in ELSS
as the concept of,
rupee cost averaging and
the power of compounding
works well.
Even if you have done your tax planning for
this year start this from 1st April 2011.
Systematic Investment Plan (SIP) in ELSS
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Benefits of ELSS MF
Tax benefit at the Investment
You can get tax benefit under section 80 C of Income tax. Maximum limit is Rs
100000.
Shortest duration
Lock in period of ELSS is 3 year which is shortest in comparison to any other tax
saving investment. This lock in is the only difference between diversified
equity mutual fund & ELSS.
Tax free return
Any profit/ capital gain you have from ELSS is completely tax free. If you see
return from NSC & Tax saving Bank FDs they are completely taxable & added to
your income. Only PPF Offers tax- free return but it has a maturity period of 15
years.
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Tax free dividends
ELSS schemes keeps giving dividend on regular intervals & the whole dividend
you receive is tax free.
No entry Loads (Less Expensive)
Say if you invest Rs 10000 in ELSS Scheme your complete Rs 10000 is invested
in Mutual Fund. You have to decide how much want to pay your advisor.
High Growth
Equity funds can be volatile in the short run, but have been known to beat
inflation and create wealth over the long run.
If you are looking at investing some money that you won’t need future, and are
willing to ride the ups and downs of the market, you may find ELSS an ideal tax
saving option.
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Cont…
Type of deposit:
Two types of deposits are to be offered under the
scheme,
One providing for quarterly compounding/
reinvestment of interest (RIC scheme)
Other providing for quarterly payout of Interest
(QIC scheme) to the designated operative account of
the depositor.
Two schemes:
TDGRI (Reinvestment Type)
TDGQI (Quarterly Interest Type).
Features
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Fixed Deposits with the bank shall be
subject to Tax Deduction at source as
per Income Tax Act 1961.
Interest on these term deposits
shall be liable to tax under the Act,
on the basis of annual accrual or
receipt, depending upon the
method of accounting followed by
the assesses.
The tax on such interest shall be
deducted in accordance with the
provisions of section 194A or
section 195 of the Act.
Tax Deducted at Source
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Via SIP mode rather than lump sum (for cost averaging)
In GROWTH Option (for wealth accumulation)
In DIRECT Plan (to save costs & higher returns)
It is always better to invest
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m
Make sure your tax saving
investments fulfill your needs and match
your risk profile and investment horizon.
Our Tax Savings Solutions help to
reduce your tax burden and at the same
time, aim to grow your money through
equity investments.
Section 80C of the Income Tax Act,
1961 provides options to save tax by
reducing the taxable income by up to 1
lakh. But, wealth creation is also
important.
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May invest your money in a better way
Contact Us
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