Tax Savings and Building Wealth? – ELSS Funds

Posted On Friday, Dec 31, 2021


Table of Contents
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ELSS Funds Meaning


ELSS Funds Taxation


ELSS Funds Calculator


Impact of Expense Ratio in ELSS Funds


ELSS Funds in India

ELSS Funds...

There is the answer!

But what was the question again?

“How can I build wealth with Mutual funds while saving taxes?”

Yes, that’s what ELSS Funds help you do.

Like any other mutual fund type, ELSS Funds also helps you to build wealth.

But the biggest benefit of ELSS Funds is Tax Saving.

Before we tell you more about ELSS Funds, it is important we tell you about ELSS Funds meaning.

What is ELSS Funds meaning?

ELSS - Equity Linked Saving Scheme

ELSS funds are a type of mutual fund scheme that invests majorly (at minimum 80% of their underlying portfolio) in a stock market or equity. While understanding the ELSS Funds’ meaning, it is very important to know that they are the only type of mutual funds that are eligible for Tax deductions under Sec 80C of Income tax act,1961.

Another USP of ELSS Funds is the lock-in period.

The lock-in period of ELSS Funds is the least when compared to other types of mutual fund schemes – just 3 years!

This simply means you can sell your investment in as soon as 3 years from the date of purchase.

Now that you know the ELSS Funds meaning and also its biggest advantages, you may want to start investing in ELSS Funds.

However, before you go ahead with that, there is some more information we would want you to have.

Do you know what is an ‘Expense Ratio’?

Expense ratio is the amount charged to investors as an annual fee that goes towards the management and maintenance of their investments in mutual funds.

It always makes sense to look for ELSS Funds with the lowest expense ratio, as it is somethings that eats into your returns.

So, when you are looking for or evaluating ELSS Funds to invest in, remember to look for ELSS Funds with lowest expense ratio.

Now, we know we have said enough about why you need to look for ELSS Funds with the lowest expense ratio...

But that is not the only yardstick to measure an ELSS Fund with.

There is also taxation.

ELSS Funds Taxation:

Please do not confuse ELSS Taxation with ELSS Tax Benefit.

As we have already told you, ELSS Funds are the only type of mutual fund schemes that come under the ambit of section 80c of the Income tax act. 1961.

This means that is you if you invest in ELSS Funds, you can qualify for tax saving benefit up to Rs 1,50,000 and save up to Rs 46,800 a year provided you are in the highest tax bracket.

This is the ELSS Tax Benefit.

But an investor must also know that the gains or profits that come from selling of ELSS funds are not tax free!

The long-term capital gains (LTCG) on gains only up to Rs 100,000 a year are tax-free.

However, exceeding Rs 100,000 a year in gains will attract a long-term capital gains tax at a rate of 10%, plus all the applicable cess and surcharge.

This is ELSS Funds Taxation.

So, now you know about ELSS Funds Taxation and ELSS Tax Benefits.

The next question could be, how do you find how much to invest in ELSS Funds?

To get an answer to this question, you can use an ELSS Funds Calculator.

ELSS Funds Calculator:

An ELSS funds calculator can be explained in a simple way as a simulation that can help/guide an investor to get an estimate of the value, his/her investments would rake up, depending on the investment tenure.

The ELSS funds calculator need the following as inputs - the mode of investment – SIP or Lumpsum, the amount you want to invest, frequency of the investment in case of SIP (Monthly/Yearly), an expected annual rate of return and the duration for which you plan to stay invested.

As soon as you put these pointers in, the ELSS funds calculator gives you an idea of the potential total amount your investment would have accumulated at maturity.

We believe that you now have enough information to make a decision that could benefit your investment plans.

So, what is in store for investors who are looking to invest in ELSS Funds India?

ELSS Funds India has to offer are a very popular option for investors, as they not only helps in wealth creation, but also save on taxes for them.

If you are looking for a good pick from ELSS Funds in India, you can have a look at the Quantum Tax Saving Fund.

It is an ELSS Fund that optimizes tax-saving under Section 80C while minimizing risk with the help of bottom-up stock selection.

We must also mention that it has a lower portfolio turnover along with one of the lowest expense ratio in its category.

We think you now have a better understanding of what ELSS Funds are.

We told you about ELSS Funds Meaning, ELSS Funds With Lowest Expense Ratio, ELSS Funds Taxation, ELSS Funds Calculator, ELSS Funds India, and much more.

So, if you want to start with an ELSS fund investment, you can start with us right here with as low as Rs 500 a month.

Product Labeling
  Name of the Scheme  This product is suitable for investors who are seeking*Risk-o-meter of SchemeRisk-o-meter of Benchmark
  Quantum Tax Saving Fund

  (An Open Ended Equity Linked Saving Scheme with a Statutory Lock in of 3 years and Tax Benefit)

  Primary Benchmark: S&P BSE 500 TRI
  • Long term capital appreciation

• Invests primarily in equity and equity related securities of companies in S&P BSE 200 index and to save tax u/s 80 C of the Income Tax Act. Investments in this product are subject to lock in period of 3 years.
Quantum Tax Saving Fund
Investors understand that their principal will be at
Very High Risk
Quantum Tax Saving Fund

*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
The Risk Level of the Scheme in scheme Risk O Meter is basis it's portfolio as on November 30, 2021.
The Risk Level of the Benchmark Index in the Risk O Meter is basis it's constituents as on November 30, 2021.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

Above article is authored by Quantum.

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