Nifty99000 100%

Sensex99000 100%

Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 3.9
Article rating: 5.0
Article rating: 4.0
Article rating: 4.5
Article rating: 3.8
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating


Countdown to New Year: Know why ELSS is a better tax saving option to invest in 2018

Author: Debasis Mohapatra/Sunday, December 3, 2017/Categories: Mutual Funds

Countdown to New Year: Know why ELSS is a better tax saving option to invest in 2018

Mumbai - Indians are great savers as it is deeply ingrained in our culture. Gross domestic savings of our country hovers at around 31% in recent years. Whenever one plans to save, he should not only seek preservation of his capital, but also should look at the returns on his investment.

Though there are number of financial instruments available for savings, Equity Linked Savings Schemes (ELSS) of mutual funds are most suitable for getting higher returns with greater tax savings. These instruments also have lower lock-in period as compared to other tax savings instruments.

 “ELSS is a very good tax saving mutual fund  as compared to other avenues as it provides better returns, higher liquidity with lesser lock-in period,” Rohit Grover, Certified Financial Planner at Mumbai-based advisory firm, MoneyFrog told ‘The Finapolis’.

Comparative view:

ELSS mutual funds predominantly invests in equity markets. Equity as an asset class has a proven record of creating greater wealth than other financial instruments. According to available data, equities have given a post tax return of around 17% in last 10 years and 12.9% in last 20 years. This is far higher than the returns provided by other asset classes like gold, fixed deposits and real estate among others. Therefore, ELSS is the ideal instrument for an investor who seeks wealth creation over a longer timeframe. The ELSS category has garnered 13.33% return in the last three years, 19.11% in five years, and 9.46% in last 10 years.

As far as tax savings are concerned, ELSS provides equal opportunity of tax savings with lesser lock-in period. While traditional instruments like bank fixed deposits, National Savings Certificate (NSC) get tax benefits with a 5-year lock-in period, other long-term saving avenues like Public Provident Fund (PPF) has a lock-in of 15 years. In comparison to these instruments, ELSS has far lesser lock-in period of 3 years which makes it attractive over other avenues. Investment up to Rs 1.5 lakh in ELSS can save a maximum of Rs 46,350 under section 80(c) for an individual falling under 30% tax bracket.  

Furthermore, ELSS provides the opportunity to save small amounts every month through SIP (Systematic Investment Plan) mode. It is very convenient for retail investors to save through SIP, which do away with the requirement of investing bulk amount upfront. To add, returns of ELSS is also tax free as compared to many other investment instruments which mostly attract TDS (Tax Deducted at Source) provisions.  

Therefore, ELSS is an ideal tax savings instrument for investors who look at wealth creation over a longer period.  As we approach the last quarter of this financial year, every investor should consider investing in ELSS as per his/her risk profile and return expectations. 

Print Rate this article:
No rating

Number of views (326)/Comments (0)

rajyashree guha

Debasis Mohapatra

Other posts by Debasis Mohapatra
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free