Quantum Tax Saving Fund
What is an ELSS scheme?
An Equity Linked Savings Scheme ( ELSS ), is a mutual fund scheme that invests in equity & equity related securities. It has a lock in period of 3 years. Therefore investments made in the scheme cannot be redeemed for a period of 3 years.
Investments in an ELSS scheme are eligible for a deduction under section 80C of the Income Tax Act, 1961. Quantum Tax Saving Fund is an open ended equity linked savings scheme.
How has ELSS performed in comparison to various other schemes eligible under Section 80C ?
|PERFORMANCE ||PPF ||NSC ||ELSS ||Bank Fixed Deposits |
|Minimum Tenure (years) ||15 ||6 ||3 ||5 |
|Return ||8.5% ||8% ||12-15%* ||9.25% (depends on prevailing interest rate) |
|Tax Treatment ||Tax Free ||Interest Taxable ||No tax on Dividend & Capital gains ||Interest Taxable |
Source: www.nsiindia.gov.in, www.sbi.co.in * Historical Returns on equities.Source - Bloomberg. Please read - "Two birds with one stone" for more details
Is this a good time to invest in mutual funds? When would it be a good time?
We believe that there is no good or bad time to invest. Investors would be better served by saving and investing regularly and leaving the worries of managing the portfolio to the fund manager. Compounded returns tend to have a significant impact over long periods of time. So, the earlier one begins to invest in mutual funds, the better the returns could be.
We do not get carried away by the movements of various equity indices, on a day to day basis. We are focused on identifying individual stocks and buy them at prices that we are comfortable with. If the prices are too high, we do not buy them. We follow a disciplined research and investment process.
Why should an investor invest in Quantum Mutual Fund?
Quantum Mutual Fund is India’s first direct-to-investor mutual fund. Quantum Mutual Fund is focused on keeping costs low for investors. We do not charge entry loads nor do we pay commissions or incentives to distributors/agents. Stock picking and portfolio construction is process driven, and not based on the whims and fancies of the fund manager.
Why should I invest in the Quantum Tax Saving Fund?
- Quantum Tax Saving Fund (QTSF) shall invest in equity and equity related securities. Historical Analysis shows that equities have the potential to earn higher returns than other asset classes over a longer period of time.
- Investments under Quantum Tax Saving Fund are eligible for tax benefits under section 80C of the Income Tax Act, 1961. By investing in QTSF, cash outgo in the form of taxes is reduced. Tax saved = money earned. The amount saved if compounded over long periods time can generate substantial additional networth.
- Lock in period of 3 years, can help reduce portfolio churn as the fund manager of the scheme need not readjust the portfolio to meet frequent redemptions. This can result in reduced recurring expenses and therefore positively impact the potential returns.
An illustration on the savings by investing QTSF is given below :
|Taxable Income ||Gross Tax Payable ||Investment in QTSF u/s 80C ||Tax Payable after QTSF Investment ||Savings |
| || || || ||Amount ||% to Investment |
|200,000 ||5,150 ||50,000 ||Nil ||5,150 ||10.30% |
|300,000 ||15,450 ||100,000 ||5,150 ||10,300 ||10.30% |
|400,000 ||36,050 ||100,000 ||15,450 ||20,600 ||20.60% |
|500,000 ||56,650 ||100,000 ||36,050 ||20,600 ||20.60% |
|600,000 ||87,550 ||100,000 ||56,650 ||30,900 ||30.90% |
|800,000 ||149,350 ||100,000 ||118,450 ||30,900 ||30.90% |
|1,200,000 ||300,245 ||100,000 ||266,255 ||33,990 ||33.99% |
All calculations are based on the current Income tax laws applicable to Individual and HUF assessees other than working women and senior citizens. The above table is pure for illustrative purposes. Please consult a tax advisor for specific tax implications. QTSF = Quantum Tax Saving Fund.
What is the Benchmark of the Fund? Why?
The fund would benchmark its performance to the BSE Sensex TRI (total returns index). We prefer the BSE Sensex Total Returns Index to the BSE Sensex as it offers a better comparison of performance. A TRI index includes the impact of all material facts- including dividends, other cash distributions and capital gains. The investor would naturally be entitled to such benefits. The BSE Sensex on the other hand only records the impact of the capital gains.
What are the different plans / options available in the Quantum Tax Saving Fund ?
The scheme offers Growth Plan & Dividend Plan. The dividend plan in turn offers Dividend Payout & Dividend Reinvestment options.
What is the Minimum Purchase Amount ?
The minimum purchase amount is Rs. 500 / - and in multiples of Rs. 500 / - thereafter
Can I switch my investments from other Quantum Mutual Fund schemes into Quantum Tax Saving Fund ?
Existing Investors in Quantum Long Term Equity Fund and Quantum Liquid Fund can switch their units into Quantum Tax Saving Fund on an ongoing basis.
Can one do Systematic Investment Plan (SIP) in Quantum Tax Saving Fund?
Yes, an investor can do SIP in Quantum Tax Saving Fund. The investors may opt to invest under the SIP.
The SIP can be done in the following frequency in multiples of Rs 500/-.
How can one invest in Quantum Tax Saving Fund?
Who can invest in the Quantum Tax Saving Fund?
The following persons are eligible and may apply for subscription to the Units of the Scheme (subject, wherever relevant, to purchase of units of mutual funds being permitted under relevant statutory regulations and their respective constitutions):
- Resident adult individuals either singly or jointly (not exceeding three);or on an Anyone or Survivor basis
- A Hindu Undivided Family (HUF) through its Karta
- An Association of Persons or a body of individuals (as mentioned under the term “Assessee” in the ELSS) As the Scheme is floated as an Equity Linked Savings Scheme as per the ELSS, the following categories of investors will not qualify for the tax benefits under Section 80C of the Income Tax Act, 1961 (but are entitled to subscribe to Units):
- Minors through parent/legal guardian;
- Partnership Firms;
- Companies, Bodies Corporate, and societies registered under the Societies Registration Act,1860;
- Banks & Financial Institutions;
- Religious and Charitable Trusts, Wakfs or endowments of private trusts (subject to receipt of necessary approvals as required) and Private trusts authorised to invest in mutual fund schemes under their trust deeds;
- Non-Resident Indians (NRIs/) Persons of Indian origin residing abroad (PIO) on repatriation basis or on non-repatriation basis;
- Foreign Institutional Investors (FIIs) registered with SEBI on repatriation basis;
- Army, Air Force, Navy and other para-military units and bodies created by such institutions;
- Scientific and Industrial Research Organisations;
- Multilateral Funding Agencies/Bodies Corporate incorporated outside India with the permission of Government of India/Reserve Bank of India;
- Other schemes of Mutual Funds registered with SEBI subject to the conditions and limits prescribed by SEBI Regulations;
- Trustee, AMC or Sponsor or their associates may subscribe to Units under the Scheme;
- Such other individuals/institutions/body corporate etc., as may be decided by the Mutual Fund from time to time, so long as wherever applicable they are in conformity with SEBI Regulations.
What is the consequence of early redemption?
Quantum Tax Saving Fund cannot be redeemed before the expiry of three years. In case of death of the investor, the nominee or legal heir can withdraw the investment, but only after completing one year from the date of allotment of the units to the unit holder.
Through which banks can I invest in Quantum Mutual Fund?
Using the Net Banking facility you can purchase the Quantum Long Term Equity Fund, Quantum Tax Saving Fund, Quantum Equity Fund of Funds and the Quantum Liquid Fund from the following Banks:
- Allahabad Bank
- Axis Bank
- Andhra Bank
- Bank of Bahrain & Kuwait
- Bank of Baroda
- Bank of India
- Bank of Maharashtra
- Canara Bank
- Central Bank of India
- City Union Bank
- Corporation Bank
- Deutsche Bank
- Development Credit Bank
- Dhanlaxmi Bank
- Federal Bank
- HDFC Bank
- ICICI Bank
- IDBI Bank
- Indian Bank
- Indian Overseas NetBanking
- IndusInd Bank
- ING Vysya Bank
- Jammu & Kashmir Bank
- Karnataka Bank
- Karur Vysya Bank
- Kotak Bank
- Laxmi Vilas Bank
- Oriental Bank of Commerce
- Punjab National Bank Corporate Net Banking
- Punjab National Bank Retail Net Banking
- Punjab and Sind Bank
- Shamrao Vitthal Co-operative Bank
- South Indian Bank
- State Bank of Bikaner & Jaipur
- State Bank of Hyderabad
- State Bank of India
- State Bank of Indore
- State Bank of Mysore
- State Bank of Patiala
- State Bank of Travancore
- Syndicate Bank
- Tamilnad Mercantile Bank
- UCO Bank
- Union Bank of India
- United Bank of India
- Vijaya Bank
- Yes Bank