Here's How To Invest And Do Tax Planning With Equity Linked Savings Scheme (ELSS) In April

Start of a financial year is apt for planning for your tax saving investments. Of the various tax saving investments, equity linked savings scheme (ELSS), essentially a mutual fund scheme with tax benefits suits the most for someone looking to save tax by investing in the stock market.

ELSS is a mutual fund scheme that comes with a lock-in period of three years and helps you save tax under section 80C of the income Tax Act on an investment up to Rs 1.5 lakh a financial year. ELSS gives investors an opportunity to diversify themes, sectors and market caps.

The lock-in lends an element of stability to ELSS portfolios. Since corporate money is kept out, these schemes don’t have to deal with sudden, large-scale redemptions. As a result, ELSS tends to have a more stable corpus and an optimum corpus size, which encourages good fund management. The fund manager can take a medium to long-term view on certain stocks; this further helps in improving the returns from the schemes. The lock-in-period of 3 years in ELSS allows the investor to become more disciplined and realize the true potential of the investment made.