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Saturday, May 23, 2009

ELSS good for long-term investor

An equity-linked savings scheme (ELSS) is a variety of diversified equity fund. An investment in an ELSS is taxdeductible under Section 80C of the Income Tax Act. An ELSS is like any other equity fund. However, the lock-in period is three years. It comes with all the usual trappings of an equity fund, including the choice between dividend and growth options, and systematic investment plans (SIP).

Under the IT Act, investors investing in an ELSS can claim benefits under Section 80C. The limit under this Section is Rs 1 lakh. The dividends earned in an ELSS are tax-free . The returns at maturity are also tax-free .

Among all tax-saving options an ELSS stands out. However, in the present conditions, the returns have not been as good as in the past. The stock markets have given huge negative returns in the last year and all equity schemes, including tax-saving ones, were down.

Read more  here 

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