Stock market returns and tax exemption like PPF, know double ‘engine’ investing, invest money in it yourself today

New Delhi. Whenever you invest anywhere, expect more returns. On the other hand, if you make this mutual fund investment, then the expectation increases even more. But sometimes you also have to pay income tax on the amount invested. In such a situation, you look for such investment opportunities where you also get tax exemption. However, some equity funds also go a long way towards meeting your expectations of huge returns. But now the question is whether you have to tax it or not?

Let us tell you that investing in stock mutual funds may or may not give you a tax exemption. That means you won’t get a tax exemption in all mutual fund systems. But by investing in a special type of mutual fund i.e. Equity Linked Savings Scheme (ELSS) you not only get a tax exemption but also huge returns.

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A rebate of up to Rs 1.5 lakh is available under Section 80C
Investing in an equity linked savings scheme gives you an exemption of up to Rs 1.5 lakh per annum under Section 80C of Income Tax. If your investments below 80ºC are not completed in a fiscal year, this is a great option for you. If you haven’t added it to your portfolio yet, you can include it in your planning for this fiscal year.

Benefit twice as much from ELSS
Even after investing in an equity-linked savings program, you still get returns like you would with other mutual funds. However, ELSS differs from other ordinary mutual funds. Because 80 percent of the investments are invested in shares. At the same time, you get no tax exemption for investing in all mutual funds. While ELSS is a tax-saving equity fund. Whether you invest each month through SIP or deposit the amount all at once, you can claim Section 80C income tax exemption in either case.

It is very important to know this before investing
If you are planning to invest in ELSS to save on taxes, then the first thing you need to know is that there is a 3 year lock-up period. That is, after investing in it, you will not be able to withdraw it for 3 years. If, on the other hand, you invest in it via SIP, then each SIP matures in a cycle of 3 years, ie after 3 years one SIP is due every month.

Do this to save on capital gains tax
Let us tell you that to invest in ELSS you should use the same amount that you will not need for at least the next 5 years. At the same time, you should withdraw the funds as soon as the 4 years are up. This allows you to withdraw the deposited funds every year after 4 years have passed. This way you can save on capital gains tax. Let us tell you that if your profit is more than 1 lakh then a 10% long-term capital gains tax will be payable on it. ELSS is in a sense an EEE category investment fund. That means the amount invested, the return received on it, and the money received at maturity are all three tax-free. So it works like PPF in terms of tax exemption.

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