Best mutual funds to buy in 2019: Not just great returns, this help save income tax too!
Best Mutual funds: Equity-Linked Savings Scheme or ELSS mutual fund is a type of open-ended equity mutual fund.
Best Mutual funds to buy in 2019: ELSS or Equity-Linked Savings Scheme mutual fund is a type of open-ended equity mutual fund. ELSS mutual funds invest in equity and equity-related securities of companies. What makes an investment in ELSS mutual funds the most attractive is that they are eligible for income tax benefits under Section 80C of the Income Tax Act. In ELSS mutual fund investment, one can claim tax exemption on up to Rs 1.5 lakh annual investments in these funds. However, these mutual funds come with a lock-in period of three years, which means that until that time is over, investors cannot redeem their fund units. Apart from that, an investor who has invested in the ELSS mutual fund will have to pay Long Term Capital Gain (LTCG) Tax at the time of withdrawal of the maturity amount. Despite that, it has the least lock-in period among all tax savings scheme. You can invest in ELSS via lump sum or SIP mode.
Commenting upon the purpose of investing in ELSS Mutual Funds Harsh Jain, COO & Co-founder at Groww said, "ELSS mutual funds are a smart way to save a significant amount of money that would otherwise go towards taxes. However, ELSS funds being purely equity funds, are dependent on market timings and hence market risks. The risks, therefore, are more than that of PPF and FD, however, potential returns are higher as well."
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Best Mutual funds to buy in 2019, according to Jain -
Axis Long Term Equity Direct-G
Aditya Birla SL Tax Relief 96 Direct-G,
ICICI Pru Long Term Equity (Tax Saving) Direct-G
Franklin India Taxshield Direct-G
L&T Tax Adv Direct-G
DSP Tax Saver Direct-G
Kotak Tax Saver Direct-G
Tata India Tax Savings Direct-G
Invesco India Tax Plan Direct Growth
HDFC LT Advantage Direct-G
"These are some ELSS mutual funds with moderate risk factor involved, which an investor can think of investing," he said, while adding that these funds are expected to outperform other ELSS mutual funds in a long-term perspective.
Elaborating upon the income tax advantages that an ELSS mutual fund investor can avail Jain said, "For most investors, ELSS investments are a tool to save taxes. ELSS mutual funds help investors to save taxes through tax deductions, tax exemptions, and benefit of indexation. The 1.5 lakh rupees that one invests can be deducted from the taxable income, and returns under Rs 1 lakh are exempted from taxation. Thus ELSS enables investors to save taxes and build wealth in the process."
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