Investing In A Tax Saving Mutual Fund

Posted On Monday, Jan 30, 2017


The New Financial Year is about to start. So while we look forward, with great anticipation to that new year party when the Financial year ( April-March) is about to change, the upcoming new fiscal year is approached with trepidation as it comes with its fair share of questions – the biggest one being – How do I save tax?

So, How Do I Save Tax?

Every February, your employers will ask you to submit investment proofs to them if you are a salaried employee. Delay in submission of investment proofs to the employer may lead to excess TDS being deducted on your Income. This means that the money you get in the bank account is that much lower. There are several sections under the Income Tax Act that allow you deductions on certain income and investments. 80C being the most popular, which is addressed below, there are also sections like Section 80D etc. which could benefit you as a tax payer. This will help you reduce the amount that qualifies as being taxable. So choose the right instrument to invest in, and save tax!

As stated earlier, February is the time that the term 'Section 80C' starts to really trend in Google searches. Here is what the section is all about (in brief, of course). Section 80C allows for a Deduction of Rs. 1,50,000 from your total income. This is one of the most popular and the most effective mode of deductions as your PPF, insurance and ELSS investments fall under this section. What this does is, if you have Gross Total income of say Rs. 200,000 and hypothetically you invest Rs. 150,000 in an ELSS fund, like the Quantum Tax Saving Fund (You may click here to read about Quantum Tax Saving Fund or here to invest now and start saving tax right away!) The tax you pay will be on Rs. 200,000 - Rs. 150,000 = 50,000. So investments in 80C don’t reduce your tax liability, but they do reduce the ‘principle’ amount on which the tax is calculated.

In addition, Section 80 D deals with tax deductions on medical insurance. This section allows you to receive tax deductions on premiums made for medical insurance for yourself and on behalf of your family. A taxpayer can claim the deductions u/s 80D for self, spouse, children and parents. Above all these you can save a tax if you have given donations which fall under 80 G. All donations are not eligible for deduction under section 80G. Only donations made to prescribed funds qualify as a deduction.

Your To-Do list to Save Tax!

Remember Tax planning is challenging, but it can also be rewarding if done right. The simplest thing to do would be to invest in a tax saving fund, which helps you build wealth and reduce your tax liability. However you need to do a little homework, here are a few points you should consider while investing in a tax saving fund:

• Track record of the fund
• Track record of a tax saving fund where you plan to invest
• Fund house philosophy
• Your financial obligations.

The fund you choose needs to favorably tick the above boxes as a tax saving fund has a lock in period of 3 years and if you are going to trust someone with your money you need to know the philosophy of the people investing it for you – are they blind gain chasers? Or is there a method, a philosophy that governs their investing pattern?

Remember, though saving tax liability is a major purpose behind investment in tax saving fund; any investment should also deliver some return. Hence, while evaluating your options for the best fund to invest in, you need to look at the return column too. Do not forget that as an investor, should know the risk and reward attached to investment before taking the plunge with your hard earning money.

Hope you will take a correct decision and select a fund which will not only help you save tax but also help you build wealth for the long term.

Please refer to the Tax Consultant or Financial Advisor before making any investment decision.

Product Labeling

Name of the Scheme & Primary BenchmarkThis product is suitable for investors who are seeking*Risk-o-meter of Scheme
Quantum Tax Saving Fund

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

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

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. Please visit – to read scheme specific risk factors.

Above article is authored by Quantum.

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