Why is ELSS a preferred mode of investment?
Investors have the flexibility to invest in ELSS mutual funds either through systematic investment plan (SIP) or by making lump sum investments. Capital appreciation potential, low lock-in period, as well as tax benefits have made ELSS mutual funds one of the preferred tax-saving investment options in recent times.
ELSS funds are also considered to be sustainable as people can plan for their futures while saving on taxes. It offers dual benefits of tax deductions and wealth creation over time.
As compared to other tax-saving instruments such as fixed deposits (FD) or public provident funds (PPF), ELSS mutual funds stand out as its returns are generally higher, especially when markets are bullish.
Updated Mar 15, 2021 | 07:15 IST
Using a blend of appropriate retirement options might be a smart strategy in the present scenario. High earners should diversify their investment corpus across EPF, VPF, PPF, and NPS to maximise returns. Representational image
New Delhi: Public Provident Fund (PPF), Employees Provident Fund (EPF), Equity Linked Savings Scheme (ELSS) and National Pension System (NPS) are some of the most popular instruments used to save tax under Section 80C of Income Tax Act 1961 and to build a corpus for retirement. But out of all the above investment options, NPS provides you maximum tax-saving opportunity as you can make additional tax benefit under Sections 80CCD(1), 80CCD(2), and 80CCD(1B) of the Income Tax Act. Under NPS Section 80CCD(2) allows you to avail an exemption of 10% on your employer s NPS contribution (basic+DA). As an investor, you can seek out investment strategies that would not only allow you to save tax but al