Why ELSS Remain A Good Bet In The LTCG Tax Era

Why equity-linked savings schemes remain a good bet in the LTCG tax era

Long-term Capital Gains (LTCG) tax on equity made a comeback after almost 14 years in 2018. Now, equity fund investors will have to pay 10 per cent LTCG tax on gains over Rs 1 lakh in a financial year. This means that the gains made from investments in ELSS (equity-linked savings schemes) will attract LTCG tax at redemption if the net gain is over Rs 1 lakh in a financial year.

ELSS is a diversified equity mutual fund product that qualifies as a taxsaving instrument under Section 80C of the Income Tax Act. The tax exemption is limited to an investment of Rs 1.5 lakh. Taxation on your equity investment doesn’t mean it has lost its charm. “Even with LTCG tax, equity remains attractive from a taxation standpoint,” says Radhika Gupta, CEO, Edelweiss Mutual Fund. “Investors should continue looking at equity as an asset class for the long term.”