Tax planning tips for mutual fund investments

With the tax planning season about to end and a deadline to file your taxes fast approaching, some of you must be in panic mode to make investments to minimize your tax liabilities. However, in a rush to ensure that you meet the deadline and save tax, you may end up investing in the wrong instruments and paying more tax and charges in the long run. Remember a good chunk of your hard earned money could be eaten up by the charges.

Here are a few ways which can help you to minimize your tax liabilities:

ELSS

Tax saving mutual funds, also known as Equity Linked Savings Schemes (ELSS) offer the investor twin benefits of tax saving and the potential for wealth creation by investing in equities for the long term. All ELSS schemes have a 3 year lock in period, which means that your money is effectively locked away for 3 years, a decent time frame to earn returns from the market. Thus ELSS schemes offer you the convenience of saving taxes along with the advantage of investing in equities, rather than just an equity scheme which only gives returns without the tax saving benefit.

ELSS = Tax Benefits + Long Term Capital Appreciation

What are the other benefits of investing in ELSS?

*In view of individual nature of tax consequences, please consult with your financial advisor/ tax consultant.

At Quantum, we understand the need to preserve your hard earned money, that`s why our tax saving fund could be the answer to your tax saving needs.

The Quantum Tax Saving Fund* (QTSF) will help you save tax and help build a corpus as investments in Quantum Tax Saving Fund earn you tax exemption from your gross total income along with other prescribed investments of up to Rs. 1,00,000 under section 80C of the Income Tax Act, 1961. Quantum Tax Saving Fund is an open ended Equity Linked Saving Scheme, where your money gets locked in for a period of 3 years. Units issued under the Quantum Tax Saving Fund will not be redeemed until the expiry of 3 years from the date of their allotment. This helps you to maintain your investments even if market movements might tempt you to redeem.

Here is a look at the past performance of the Quantum Tax Saving Fund. It is being managed by Mr. Atul Kumar – Head - Equity Funds. He also manages Quantum Long Term Equity Fund (QLTEF) ^.

^#Quantitative data as on 31 December, 2013         Standard Deviation: 15.85%         Beta: 0.65         Sharpe Ratio: 1.53

Past Performance may or may not be sustained in the future and may not necessarily provide a basis for comparison with other investments.

(Please refer below for performance of Quantum Long Term Equity Fund)

Hence, if you are looking for an option to cut down your taxes and earn returns, you can consider the Quantum Tax Savings Fund as an investment option to enjoy the double benefits of tax saving and investing your hard earned money to help you achieve your financial goals.

RGESS (Rajiv Gandhi Equity Savings Scheme)

The RGESS allows one time deduction for Income Tax purpose to new retail investors having gross total income up to Rs 12 lakh for the financial year in which the investment is made, an additional tax saving under the newly introduced Section 80 CCG. Hence, you can claim a deduction of 50 per cent of the invested amount. However, the maximum investment amount is Rs 50,000, so the maximum deduction availed of can be Rs 25,000. This deduction is over and above the Rs 1 lakh limit available under Section 80C. Know more about Rajiv Gandhi Equity Savings Scheme (RGESS).

Tax saving is not complex. There are many alternatives and options available for tax saving like PPF Accounts, NSCs, KVPs, tax saving FDs etc., but you have to choose the right investment avenues. You have to understand the available options thoroughly and choose the ones that match your requirements. Remember, you should consult your financial advisor/ tax consultant for guidance before you decide to take the plunge and make any financial investments.

 (BROWN) - High risk:  Quantum Long Term Equity Fund

This product is suitable for investors who are seeking to achieve long term capital appreciation by investing in equity and equity related securities of companies in S&P BSE 200 index. Investors should consult their financial advisers if in doubt whether the product is suitable for them.

 (BROWN) - High risk:  Quantum Tax Saving Fund

This product is suitable for investors who are seeking to achieve long term capital appreciation by investing in equity and equity related securities of companies in S&P BSE 200 index and to save tax u/s 80C of the Income Tax Act. Investments in this product are subject to lock in period of 3 years. Investors should consult their financial advisers if in doubt whether the product is suitable for them.

Risk may be represented as:

Above article is authored by Quantum.

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