Latest news with #ELSS
Mint
10 hours ago
- Business
- Mint
Top 5 income tax saving options with low or no lock-in periods
As the date of income tax submission nears, taxpayers across the country are actively seeking ways to bring down their taxable income without locking in their funds for years. While many popular investment instruments such as Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS) among others require long term commitments, several provide quick liquidity, lower risk and efficient Section 80C or other related deductions, thus making them ideal for those aspiring to prioritise financial flexibility. Keeping the same factors in mind below are five tax saving options that investors can avail without decadal or very long lock in periods and ensure that they are able to save money smartly. Several banking institutions provide 5 year tax saving fixed deposits (FDs) under Section 80C. Given these fixed deposits do have a five year lock in period, still they also provide premature liquidity in emergencies through a personal loan or overdraft, unlike PPF or NPS. Do keep in mind, the interest earned on such deposits is taxable, but the principal invested qualifies for deduction up to ₹ 1.5 lakh. Health insurance continues to be a reputable tax saving recommendation by banking institutions and financial advisors. Premiums of up to ₹ 25,000 ( ₹ 50,000 in case of senior citizens) are deductible under Section 80D. It is also important to note that there is no lock in and deductions can be claimed every year upon renewal, making it one of the most lucrative and flexible options. For salaried individuals, all contributions made to the Employee Provident Fund (EPF) automatically qualify for Section 80C deductions. Though EPF has a retirement oriented vision and structure, still partial withdrawals are permitted for marriage, education, home ownership and medical emergencies such as serious surgeries and procedures. Thus providing partial liquidity without breaking the investment. The repayment of home loan principal amount qualifies under Section 80C. The interest up to ₹ 2 lakhs is deductible under Section 24(b). There's no fixed lock in and deductions can be claimed yearly throughout the tenure of the home loan. It remains one of the most utilised tax saving strategies for home owners. National Pension System (NPS) provides deductions under Section 80CCD(1B) of up to ₹ 50,000 over and above the deduction provided under Section 80C. Though tier I is long term, tier II accounts offer flexible withdrawals. Do keep in mind that tier II is tax exempt only for government employees. Withdrawal of partial amounts are also permitted after three years under specific terms and conditions. Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. Please consult a qualified tax advisor or financial planner before making any investment or tax-saving decisions.
News18
3 days ago
- Business
- News18
Monthly Savings Vs. SIP: Which Is Better For Wealth Accumulation?
Last Updated: Before making an investment decision, it's important that investors understand the differences and benefits of traditional saving methods versus mutual fund SIPs. If you want to take control of your finances and build long-term wealth, the first step is understanding the different savings and investment options out there. Traditional saving methods have long been a part of how many people manage money. But today, more and more people are turning to mutual funds through Systematic Investment Plans (SIPs) to grow their wealth in a structured way. Here's how both approaches work, and how they can help you improve your financial game. Monthly Savings Traditional saving tools such as savings accounts, Fixed Deposits (FDs) and Recurring Deposits (RDs) offer investors stable and predictable returns on the amount invested. A savings account provides easy liquidity and access to funds through internet banking and ATM facilities, along with nominal interest rates. In contrast, fixed and recurring deposits offer fixed returns over a predetermined lock-in period. While savings accounts are regarded as a safe place to park your money, fixed deposits offer higher interest rates, helping to accelerate wealth accumulation. They are also considered equally low-risk as savings accounts. But they lack liquidity, as funds can only be withdrawn at the end of the deposit tenure. Premature withdrawal may attract a penalty from the bank. Systematic Investment Plan (SIP) A Systematic Investment Plan (SIP) is a method of investing in the financial markets, allowing investors to contribute a fixed amount at pre-set intervals into a selected mutual fund scheme. Offering the flexibility to start with a small amount, mutual fund SIPs are accessible to a wide range of investors. While subject to market risks, remaining invested in the right mutual fund scheme can yield high returns and help build a substantial corpus over time. Thanks to rupee cost averaging, more units are purchased when prices are low and fewer when they are high, which balances out both risk and cost across the investment period—helping investors navigate market fluctuations. When linked with Equity Linked Saving Schemes (ELSS), SIPs also offer tax benefits under Section 80C of the Income Tax Act. Investors can gradually increase their SIP contributions in line with rising income levels. Key Differences Growth Potential: Linked to the stock market, mutual fund SIPs offer investors higher growth potential. They benefit from the concept of rupee cost averaging, making them a more appealing option for those with a reasonable risk appetite compared to the safer but lower returns of fixed deposits. Diversification: By investing in a range of stocks and bonds, mutual fund SIPs enable diversification of your investment portfolio in line with the objectives of the selected scheme. Traditional savings methods, being unrelated to financial markets, do not offer such diversification. Risk: Traditional savings methods carry minimal to no risk on the principal amount assured. In contrast, SIPs are subject to market volatility. However, investing in a fund with a strong performance record is generally considered safe and likely to deliver the expected outcomes. Liquidity: Traditional savings options typically offer greater liquidity. In comparison, mutual fund SIPs may involve exit loads or be influenced by market conditions at the time of withdrawal, depending on the specific fund in which you have invested. First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Time of India
4 days ago
- Business
- Time of India
ELSS funds: Go-to scheme for tax saving loses traction as new tax regime picks favour; Rs 1,600 crore outflows in Q1 FY26
Once a go-to choice for tax-saving investments, equity-linked savings schemes (ELSS) are slowly slipping off investors' radar. More taxpayers are pulling out of the ELSS as they are switching to a new tax regime, which provides no tax benefits under section 80C, according to an ET report. Data for the first quarter of FY26 reveals net outflows of Rs 1,616 crore from ELSS funds, indicating a drying up of fresh inflows and increasing withdrawals from investors whose three-year mandatory lock-in period has ended. Over the past 12 months, ELSS schemes managed a modest net inflow of Rs 535 crore, against the Rs 56,309 crore that poured into the flexicap category during the same period. "Many taxpayers have switched or are switching to the new tax regime, which is now very much attractive," Gautam Nayak, partner at CNK and Associates was quoted as saying. "Since there are no tax benefits available under Section 80C, these investors would not want to invest in ELSS schemes and lock in their investments for 3 years." Why did people prefer ELSS earlier? Traditionally, ELSS was favoured for offering a shorter lock-in compared to other tax-saving products like Public Provident Fund (PPF), National Savings Certificates (NSC), and five-year tax-saving fixed deposits. Being equity-oriented, it also offered superior returns. Under the old tax regime, investors could invest up to Rs 1.5 lakh annually in ELSS and claim deductions under Section 80C. But the appeal seems to be fading over time. Since the past year, ELSS has registered the slowest growth among equity funds, with assets under management (AUM) rising just 6.9%, from Rs 2.33 lakh crore to Rs 2.49 lakh crore. In contrast, total equity scheme AUM grew by nearly 22%, from Rs 26.82 lakh crore to Rs 32.69 lakh crore. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
4 days ago
- Business
- Mint
Mirae Asset ELSS Tax Saver Fund: Strong 5-year CAGR of 18.70% — Should you bet on it?
The Mirae Asset ELSS Tax Saver Fund is a popular investment option among investors aspiring to save tax and create wealth on a long term basis. This Equity Linked Savings Scheme (ELSS) comes with a three-year lock-in period and Section 80C benefits of up to ₹ 1.5 lakh annually. Vaibhav Shah, Head – Products, Business Strategy & International Business, Mirae Asset Investment Managers (India), says, "For individuals filing taxes under the old regime, investing in ELSS (Equity Linked Savings Scheme) funds can offer tax savings of up to ₹ 46,800 per year on investments up to ₹ 1.5 lakh, depending on their tax slab.' He further added, 'Beyond tax benefits, ELSS funds also encourage disciplined investing due to their mandatory 3-year lock-in period, which helps investors avoid impulsive decisions during market fluctuations. Thus, for long-term investments, ELSS makes much more sense." As of July 2025, the Mirae Asset ELSS Tax Saver Fund (Direct-Growth) has delivered strong and consistent returns timeframes, making it a reliable performer in the ELSS category. It has showcased good performance over the years and looks primed to continue on the same trajectory. Period Return (% CAGR) 1 year 21.06% 3 years 17.48% 5 years 18.72% Since inception 17.83% Note: The returns discussed above are illustrative in nature. For complete details of the fund and its performance refer to the website of Mirae Asset. It is important to note that the 5-year CAGR of 18.72% stands out, outperforming many peer ELSS fund schemes. Furthermore, despite market fluctuations due to the ongoing geo-political issues due to the tariffs and wars i.e., Russia-Ukraine war and other disputes the fund has continued to deliver resilient growth potential. Investments done in this fund qualify for tax deductions under Section 80C of the Income Tax Act. This deduction is permitted up to ₹ 1.5 lakh annually. It also has the shortest lock in period among tax saving instruments, just 3 years. Further, this lock-in is implemented on such funds to allow them to compound wealth, as it is common knowledge that wealth in equity markets is only made on compounding. This makes this ELSS scheme tax efficient along with being relatively liquid in comparison with other tax saving schemes such as NSC and PPF. The fund focuses on maintaining a well balanced portfolio spread across large-cap, mid-cap and small-cap stocks. The top sectoral allocations include financials, consumer goods, technology and chemicals. This diversification permits in reducing risk while capturing opportunities across different market capitalisations and sectors. This is another extremely crucial metric associated with this fund, it is the expense ratio. For direct plans, the expense ratio is just 0.56%, one of the lowest in the entire ELSS category. This simply means more of your invested money works towards creation of wealth and generating returns instead of being eroded by fund management fees and charges. Hence, as a general rule you should invest in only those funds that have low expense ratios. Given the lock-in period and equity exposure, this fund is appropriate for investors who have a long term vision. The holding period preferably should be 5 years or more. If you stay invested beyond the 3-year lock-in period then the compounding benefits can significantly boost your overall corpus. Hence, the Mirae Asset ELSS Tax Saver Fund provides a mix of tax saving, disciplined investing, and strong long term returns. Still, as it is an equity oriented investment product, investors should be completely aware of and prepared for short term volatility. That is why you should always align such investments with your financial goals, long term targets and risk taking appetite. Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing.
Economic Times
5 days ago
- Business
- Economic Times
Is ELSS losing its appeal in the new tax regime?
Getty Images The equity scheme assets grew by nearly 22% from ₹26.82 lakh crore to ₹32.69 lakh crore in this period. Mumbai: Is it the beginning of a slow death for equity-linked savings scheme (ELSS), the once-popular tax-saving offering by mutual funds? With several investors shifting to the new tax regime, the demand for this equity scheme category is dwindling as fresh money is drying up, while old-timers are pulling money out after the three-year mandatory lock-in. ELSS has seen net outflows of ₹1,616 crore in the first quarter FY26. Over the last 12 months, the ELSS category has seen net inflows of ₹535 crore, compared to flows into the flexicap category worth ₹56,309 crore. "Many taxpayers have switched or are switching to the new tax regime, which is now very much attractive," says Gautam Nayak, partner, CNK and Associates. "Since there are no tax benefits available under Section 80C, these investors would not want to invest in ELSS schemes and lock in their investments for 3 years." ELSS was a popular category for individuals as it had the lowest lock-in period compared to comparable tax-saving options such as public provident fund (PPF), national savings certificates (NSC) and five-year tax-saving fixed deposits, among others. Moreover, its returns have been superior because it's an equity-oriented product. Investors could park up to ₹1.5 lakh in a financial year and get tax savings under Section 80C of the Income Tax Act in the old tax regime. However, in the new tax regime, this benefit is not the last year, the ELSS category has seen the slowest growth, with assets under management moving up from ₹2.33 lakh crore to ₹2.49 lakh crore-a rise of 6.9%. The equity scheme assets grew by nearly 22% from ₹26.82 lakh crore to ₹32.69 lakh crore in this period.
