You may have just wound up with the tax filings for yourself and your family. But were you smart about it? Were you able to maximize your tax savings? Well, it's the tax season again. As we close in on the end of the financial year, it’s time to make your annual tax saving investments. From 5-year deposits to savings schemes, PF to NPS, and ELSS, there are many options.

Seeking out more for less

We all are always looking for something extra from our money. Be it an extra discount at a mall or free gifts added to our purchases or even free, we live in a consumer driven ‘Buy One Get One’’ era today.

So why should our investments fall short?

We have just this when it comes to tax saving investments – a ‘dual advantage’ tax saving fund. Something that offers more than just simply tax saving. Equity Linked Savings Scheme or ELSS is this dual advantage offering.

What is an ELSS?

Equity Linked Savings Scheme (ELSS) is an equity oriented mutual fund offering, as mandated by SEBI. Some of its features are:

• As prescribed by Income tax rules/SBEI, it is an equity-oriented fund - 80% of its total assets are invested in equity and equity related securities

• It has a 3-year lock-in period

  
  

• It entitles you to a deduction of up to Rs.1,50,000 from your taxable income

• Like most other mutual funds, it offers convenient investing options such as SIPs and investing without a demat
  
  Also Read - What is ELSS?

What makes ELSS a dual advantage fund?

ELSS offers you the double benefit of ‘tax saving’ and ‘wealth creation over time’. Let’s see how:

● ELSS Tax Benefit
ELSS investment allows deduction from your taxable income up to Rs.1,50,000. This can offer you tax saving benefit of up to Rs. 45,0800*.

Also Read - What is Income Tax Returns?

Highest income tax bracket assumed for the calculation of income tax rate i.e., 30%. Applicable cess and surcharge extra.

● ELSS Wealth creation
The factors that contribute to this wealth creation over time are:

• Being an equity-oriented fund, investors get the long-term capital growth potential of equity.

• When investors invest year on year or on an SIP basis, in ELSS, this benefit gets compounded to augment returns

• ELSS are more tax efficient than other tax-saving instruments. Their redemption gains are taxed as long-term capital gains. These are taxed at a beneficial rate of 10% (only if gains exceed Rs.1 lac). Thus, they can offer better after-tax returns

With ELSS funds you can tick off two of your financial goals with just one investment. So, ditch the traditional and go ahead to add ELSS investments to get ‘sone pe suhaga’ for your portfolio!

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.