ELSS: Growing Strong

What is the traditional thinking of any investor??????

It is nothing but to generate more income. This indulges for a tax saving investment with a base in equity- Equity Linked Saving Scheme (ELSS). ELSS is equity diversified fund with its corpus invested in equities. It invests more than 90% of its corpus in equity market. In other words, it is an instrument where savings is linked to the equity. It has a lock-in- period for three years for its investor, comprising higher risk and returns as well. The main benefit attached to the ELSS is tax advantage under section 80 C where assessee gets deductions up to Rs.1,00,000 per year on investment under the scheme. The minimum amount under ELSS scheme for investing is Rs 500. Thus, this gives opportunity for small investors to invest and earn handsomely.

Advantages of ELSS

1) The main benefit of investing in ELSS is tax benefits. The benefit is given under section 80 C and it could be availed by any individual or HUF irrespective of their income level.

2) Investments are equity linked, so investors get higher returns which along with dividends are non taxable.

3) Capital gain on ELSS is not liable to tax as its investment focuses more than one year.

Disadvantages of ELSS

1) These funds are subject to high risk as investment is equity based.

2) The lock in period of three years is the main disadvantage of this scheme. This does not allow short term gain from this investment.

3) The past performances are not the predictor of the future, hence proper analysis has to be done.