They are types of mutual funds with zero fees. It is Equity Linked Savings Scheme that helps you to save taxes. They also provide platform to the investors to increase their returns. The scheme is open-ended and provides tax exemptions under certain sections. These funds help a person to save taxes and also earn higher rate of returns. If the rate of return on investment is higher, then usually the accesses should pay a certain percentage of tax to the government. So, such persons should use different tools to save their tax. They should buy the right schemes that can help them to save taxes.
Tax exemptions
The people with income below 1.5 lakhs are qualified for tax saving under this scheme. So, if a person wants to save taxes, then he should apply for this scheme. The people who are willing to undertake risks should only invest in ELSS schemes. In the short-period, a person can sometimes undergo loss. These funds are usually invested in stocks. These funds have the shortest lock-in period of three years. If a person wants to gain handsome returns by investing in these schemes, then they should invest for seven to eight years. They need not plan to invest for three years because the lock-in-period is three years.
A person can fulfill financial requirements by investing in top ELSS funds. Some of the best ELSS funds include:
Franklin Templeton
They provide opportunities to the investors to grow in the equity market. It is an open-ended scheme. They offer tax-deduction to the individuals and HUF for the people who want to invest below 1.5 lacs. They also provide long-term tax appreciation and they maintain a diversified portfolio. Under this scheme, the long-term capital gains are LTCG tax at 10%. The short-term capital gains are 15% along with surcharges. The investors do not pay any taxes on dividends.
Bajaj Alliance Life Goal
The investors can get returns after 10 years or more. People who invest more than 5 lacs receive loyalty addition after 10 years. They provide choice of four investment strategies and choice of eight funds. They also choose to decrease the sum assured and change in payment premium. It is one of the top ELSS funds that provide returns consistently.
DSP Tax saver funds
They provide returns to the investors normally after 10 years and the rate of return after this period is 11.92%. The lock-in period is 3 years and a person can withdraw amount after three years. The person can gain medium and long-term capital appreciation by investing in these funds.
Reliance tax saver funds
They generate long-term capital gains from the stock portfolio for the investors who invested in equity-related instruments and the mutual funds generate 20% of the returns from 1st year to last 5 years. It consistently gives higher returns. Many people invest under this scheme because they provide funds consistently and they provide annualized returns of 12.5%.
Birla SL Tax relief 96 funds
People invest under this scheme to gain long-term capital appreciation and hence they invest nearly 80% in equity. It is a consistently performing fund and hence people invest funds here.