Page 1

Tax Saving Mutual Funds


Tax Planning  Tax

planning becomes the top priority for individual tax payers as the financial year draws to closing stage

 Different

types of investment qualify for tax benefits under Section 80 C of the Income Tax Act

 This

enables individual tax payers, in the highest tax bracket, to save Rs. 30,000 on investment of Rs. 1 lakh

 Equity

Linked Savings Scheme (ELSS) or tax saving mutual fund plans qualify under Section 80 C.

 One

can invest up to Rs. 1 lakh in these mutual fund schemes every year to save taxes.


Invest Savings & Save Tax 

Tax Saving benefit is available to Equity Linked Savings Scheme (ELSS) and there are many more equity funds that offer tax benefit.

There is no ceiling for investments in ELSS however investments in ELSS qualify for tax deductions under sec 80C of the income tax act subject to a maximum of Rs 100000

Rajiv Gandhi Equity Saving Scheme provides for claiming deduction in the computation of total income of the assessment year relevant to a previous year on account of investment in eligible securities under subsection (1) of section 80CCG of the Income-tax Act,1961.

ELSS has a lock in period of 3 years unlike other kinds of mutual funds


Other Equity Funds  Below

are some of the tax savings funds offered by top mutual fund companies: UTI - Equity Tax Savings Plan UTI - Master Equity Plan Unit Scheme UTI - Long Term Advantage Series - I UTI - Long Term Advantage Series – II Reliance Equity Linked Saving Fund Series 1 IDFC Tax Saver (ELSS) Fund HDFC TaxSaver (ELSS)


Pension Plans  In

Mutual Funds, there are couple of pension plans available in the market that have  the same benefit under Section 80C

 so

it is important to look for the details to see whether an investor is looking at these funds for investment.

 This

is a long term investment plan and goal of this investment is to generate a pension or regular payment at the end of their working life.

 This

investment is a mixture of debt and equity, so this is not actually a pure equity fund.


Benefits of Investing in Equity Fund  Liquidity: Mutual

funds are highly liquid, meaning that they are easily converted to cash by redeeming the shares with the investment company. Share redemption can be done as easily as a phone call or online

 Professional

management: Mutual funds are managed by professional money managers who make the daily decisions regarding what assets the fund buys and sells

 Diversification: A

share of a mutual fund represents ownership of a portion of all the holdings owned by the mutual fund. For example, an investor who owns one share of the sample fund above owns some of all the stocks in the fund. By diversifying the assets in a portfolio, i.e., by owning a variety of financial assets, an investor can reduce the risk associated with investing

 Affordability: While

some funds require a sizeable initial investment, many have no such requirement. Furthermore, many mutual funds that have a minimum initial investment requirement waive this requirement for a retirement account and/or for an account to which regular monthly contributions are made

 Recordkeeping:

The mutual fund company keeps track of how many shares an investor has purchased or redeemed and the dates of the transactions

 Daily

share pricing (NAV): The share price of a mutual fund is determined at the end of each trading day. This means that regardless of the time of day at which the investor buys shares of a mutual fund, the price per share is set at the close of the trading day


Thank You

Types of Tax Saving Mutual Funds  

Investment generally helps in saving money for future and there are many mutual fund companies which offer tax saving mutual funds where we...

Advertisement