Investment In ELSS:  If you don't want to take much risk with your investment then instead of investing directly in the stock market, it is better to choose the option of mutual funds. With this investment option, you can invest a fixed amount every month through SIP. In recent times, investment through SIP has become a popular investment tool. However, mutual funds come under the ambit of tax. so, if you want to earn a better return and save tax, then Equity Linked Saving Schemes (ELSS) can be a good option. ELSS is also known as a tax-saving mutual fund scheme.

Three years lock-in period

One can invest in equity-linked saving schemes in a lump sum or do it through SIP as well. Generally, the lock-in period in such schemes like NSC, and Tax Saving FD is five years, whereas in ELSS it is only three years.

ELSS saving schemes offer the option to choose investments according to your budget and convenience. An investor can start investing in it with just Rs 500, however, there is no limit on maximum investment.

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Tax saving benefits in ELSS

After 3 years when ELSS matures, a tax exemption is available up to a maximum limit of Rs 1.5 lakh under Section 80C of Income Tax. Remember, one will get the benefit of this deduction only in the old tax system. Investors get other tax exemptions on the returns as well. Long-term capital gains on ELSS are tax-free up to Rs 1 lakh. Long-term capital gains above the mentioned amount are taxed at the rate of 10 per cent.

Note- This is a general observation based on various views shared by experts on multiple websites, Please do take proper advice before choosing an investment option. 

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