Tax Saving Mutual Funds
Tax Planning Tax
planning becomes the top priority for individual tax payers as the financial year draws to closing stage
types of investment qualify for tax benefits under Section 80 C of the Income Tax Act
enables individual tax payers, in the highest tax bracket, to save Rs. 30,000 on investment of Rs. 1 lakh
Linked Savings Scheme (ELSS) or tax saving mutual fund plans qualify under Section 80 C.
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
it is important to look for the details to see whether an investor is looking at these funds for investment.
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.
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
management: Mutual funds are managed by professional money managers who make the daily decisions regarding what assets the fund buys and sells
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
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
The mutual fund company keeps track of how many shares an investor has purchased or redeemed and the dates of the transactions
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