Every penny legitimately saved from tax is a penny earned. If you are looking to save tax, Equity Linked Savings Scheme or ELSS -- also known as tax-saving mutual funds -- is one of the tax-saving avenues that entitles you to a deduction of up to Rs 1.50 lakh under Section 80C of the Income Tax Act, 1961 in the financial year in which the investment is made. Not just tax-saving, with investment in ELSS your hard-earned money also potentially grows over the long term. Thus, there is a dual benefit: tax-saving and wealth-building.
The capital market regulator, SEBI, defines ELSS as a scheme that invests a minimum of 80% of total assets in equity & equity related instruments (in accordance with Equity Linked Saving Scheme, 2005 notified by Ministry of Finance) and will carry a statutory lock in of 3 years and offer tax benefit under Section 80C.
Invests at least 80% of its total assets in equity and equity-related instruments
Has a mandatory lock-in period of three years (which means money cannot be withdrawn for three years)
Helps you avail of a deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961 in the financial year in which the investment is made
Broadly the investment objective of an ELSS is "to achieve long-term capital appreciation by investing primarily in equity and equity-related instruments."
The dominant 80% of the total assets of an ELSS are invested in stocks across marketisation (largecap, midcap, and smallcaps) and sectors as per its investment process defined in SID. In a sense, an ELSS usually is market-cap and sector agnostic. So, its portfolio is diversified. Quantum Tax Saving Fund is an elss that follows a value style of investing. moreover, it adopts a bottom-up in the stock selection process, holds cash when stocks are overvalued (no derivatives, no hedging), and has a low portfolio turnover ratio.
Optimize tax saving under section 80C
Uses a bottoms-up stock selection process to minimize risk
Follows a disciplined research and investment process
Holds cash when stocks are overvalued no derivatives and no hedging
Has a low portfolio turnover
Generally, when the markets are volatile or are experiencing a downturn, it is value investing that has the potential to add value to your portfolio. Hence, holding a value-style tax saving fund makes sense.
Avoid selecting an ELSS just by looking at past returns. Past performance is not an indicator of future returns. For a prudent selection, check for:
The expense ratio
The quality of the underlying portfolio
The risk-adjusted returns generated
How the scheme fared across market phases (bulls and bears)
And the overall investment processes and systems followed by the fund house
This one is the “Income Distribution cum Capital Withdrawal" -- erstwhile known as the dividend option...
This one is the “Income Distribution cum Capital Withdrawal" -- erstwhile known as the dividend option. Investors can either opt for dividend payout or reinvest. In the case of the former, the dividend is paid out while the latter, as the name suggests, reinvests the dividend whereby new units are added. For withdrawal, the payout is appropriate, while for unit additions the reinvestment option is. Keep in mind that dividends declaration is at the discretion of the fund house, plus the dividend earned is taxable in the hands of the investor.
This one’s suitable for long-term wealth creation...
This one’s suitable for long-term wealth creation, and not looking for withdrawal.
Equity Linked Savings Scheme (ELSS) - also known as a tax-saving mutual fund combines benefits of tax saving & wealth building in a single investment. It is an equity-oriented mutual fund scheme that invests at least 80% of its total assets in equity and equity-related instruments thus potentially helping to cope with inflation. ELSS investments are eligible for tax deduction up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961 in the financial year in which the investment is made. It also has a lowest lock-in among other tax saving investments.
The deduction of up to Rs 1.50 lakh under Section 80C can be availed of only for the financial year in which the investment is made. Effectively, you could save up to Rs 46,800 per financial year, assuming you are in the highest tax bracket.But keep in mind, the deduction under Section 80C is available only when you opt for the Old Tax Regime.
The New Tax Regime, although may seem attractive for some individuals (in the lower income-tax brackets), however, it is devoid of exemptions and deductions. In other words, it does not incentivise you to make tax-saving investments. To imbibe the culture of investing for a bright financial future, it makes sense to opt for the Old Tax Regime and invest in ELSS, particularly if you are in the high-income-tax bracket. The capital gain made on ELSS is subject to short-term or capital gain tax, as the case may be. If the holding period in an ELSS is less than 12 months the Short Term Capital Gains are taxed at flat 15%. However, if the holding period is 12 months or above in the case of an equity-oriented fund, called Long Term Capital Gains, the realised gains over Rs 1 lakh with be taxed at @10%.
If you have opted for the IDCW option and dividends received are in excess of Rs 5,000 in the financial year, they will be subject to Tax Deducted at Source (TDS) as per Section 194K @10% for resident individuals, but if the PAN is not provided then @20%. In addition to the above, Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
If one is a high-risk taker whose investment objective is capital appreciation, potentially looking to earn risk adjusted returns, and has an investment horizon of 3 years+, then ELSS (also known as tax-saving mutual funds) is a suitable choice among the tax-saving instruments. ELSS can help you complement investment planning with tax planning. The investment in ELSS can be made in a lump sum or the Systematic Investment Plan (SIP) mode, as suitable to you. So, be a thoughtful investor and save yourself from the axe of tax.
|Name of the Scheme||This 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.
Investors understand that their principal will be at Very High Risk.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Disclaimer: 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 / Video 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 the Article / Video 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. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.
Mutual fund investments are subject to market risks read all scheme related documents carefully.
The investment objective of the scheme is to achieve long-term capital appreciation by investing primarily in shares of companies that will typically be included in the S&P BSE 200 Index and are in a position to benefit from the anticipated growth and development of the Indian economy and its markets.
The following features are available in the scheme:
Systematic Investment Plan (SIP) (on an going basis): This feature enables investors to save and invest periodically over a long period of time. Click here to know more about SIP in detail.
Systematic Withdrawal Plan (SWP) (On an going basis): This feature enables an investor to withdraw amount/units from their holdings in the Scheme at periodic intervals through a one-time request. Click here to know more about SWP in detail.
Systematic Transfer Plan (STP) (On an going basis): This feature enables an investor to transfer fixed amounts from their accounts in the scheme to another scheme within a folio from time to time. Click here to know more about STP in detail.
Switch options: Click here to view switch matrix for the applicable NAV.
A trigger is facility that allows you to specify an exit target (linked to value or time) or to receive an update when the desired levels are reached. The moment this target is achieved, the trigger gets activated. There can be Alert triggers or Action trigger. Click here to view the FAQ on Trigger Facility.
The Benchmark Index for the Quantum Tax Saving Fund is Tier 1 S&P BSE 500 - Total Return Index (TRI) and Tier 2 S&P BSE 200 - Total Return Index (TRI) . It appropriately represents the returns from the S&P BSE 500 S&P BSE 200 Index since it includes the dividend received from the S&P BSE 500 and 200 companies.
You can invest in following ways:
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