Which is a type of mutual fund commonly used for its tax saving benefits

3733.499 Cr 20.8% 42.2% 14.8% 11685.628 Cr 22.2% 27.9% 12.8% 3252.845 Cr 21.3% 24.8% 13.8% 3008.621 Cr 19.6% 23.5% 14.4% 10599.931 Cr 19.7% 25.1% 19.1% 13537.66 Cr 29.1% 28.5% 11.5% 591.925 Cr 23.4% 27.8% 11.4% 10434.638 Cr 25.1% 28.2% - 62.683 Cr 22.1% 22.3% 11.5% 126.842 Cr 18.5% 24% 15.5% 2348.756 Cr 32.2% 25.6% 13.9% 1999.722 Cr 19.4% 21.4% 13.8% What are Tax Saving Mutual Funds? Tax saving mutual funds, also known as Equity Linked Saving Schemes (ELSS funds), are open-ended equity funds that invest at least 80% of the total assets in equity and equity-related instruments. These mutual funds come under Section 80C investments and offer a tax benefit to investors. Investments up to INR 1.5 lakhs in these funds qualify for tax deduction under The minimum investment in ELSS funds is usually around INR 500 through SIP and lump-sum routes. These funds have a mandatory lock-in period of 3 years, after which they can be redeemed. Since they majorly invest in equity instruments, it is advised that investors stay invested for a minimum of 5 years to reap the best returns. Advantages of Investing in Tax Saving Mutual Funds Following are the advantages of investing in Tax Savings Mutual Funds: Tax Benefit Tax saving mutual funds offer a tax benefit for investors. Investors can claim tax exemption on their investments up to INR 1,50,000 under Section 80C of the Income Tax Act, 1961, for a financial year. However, tax saving mutual funds investments have a lock-in period of three y...

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Working your tax formalities can be tedious. That’s why most people in the country tend to postpone tax planning until they cannot procrastinate any longer. They invest in different avenues at the last minute. This is quite unfortunate because it has a significant impact on the state of your finances. Tax planning is an integral aspect of personal finance planning. When done right, you can save a substantial amount of money each year. In this article, let’s discuss the different tax benefits of investing in Mutual Funds. • Income Tax benefit If you want to invest in Mutual Funds for tax benefits, Equity Linked Saving Schemes (ELSS) is the way to go. ELSS funds are well-known for the tax saving benefits they offer. You can currently enjoy benefits on investments for up to INR 1.5 lakh under Section 80C of the Income Tax Act each year with ELSS. By investing in ELSS, you can get the dual benefits of investment growth as well as tax savings. HDFC Bank will help you invest in specific tax saver Mutual Funds offered through its selected vendors, that not only provide you with investment returns but also offer tax benefits. • Tax-free dividends In addition to the tax benefits investing in ELSS funds, you also get to enjoy tax-free dividends. Mutual Funds pay out dividends to investors on a regular basis. So, if you invest in ELSS funds, the dividend you receive is entirely tax-free. The best part about this benefit is that there is no maximum limit on the dividend amount for...

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In today’s day and age, finding a way to make your money work for you so that you earn money in your sleep is paramount to a financially healthy future. The ever-increasing costs of living, inflation and diminishing savings have made a financially stable future a distant reality. Investments are the only way to help build a life that we desire. But like Lyndon B Johnson famously said – ‘NOTHING COMES FREE. NOT EVEN GOOD, ESPECIALLY NOT GOOD’, investments come at a price – fees, charges and most importantly TAX. Even as a novice investor, countering these costs and earning returns that can help create wealth can be a daunting task, to say the least. How do mutual funds help in tax saving? Investing in Mutual funds can offer three types of tax saving options to investors: • Tax deduction –reduction in the total taxable income through benefits availed of under Section 80 (80C to 80U). • Tax exemption - the amount is removed from the gross total income and includes interest from tax-free bonds, or long-term capital gain on equity funds, etc. • Indexation –beneficial in long term debt investments to benefit from the inflated purchase price using the cost inflation index. Mutual funds offering Tax deduction – Mutual funds offering tax exemption –This is primarily offered in long term holding of a domestic equity or equity oriented fund. For the purpose of tax calculation, ‘long term’ in case of equity funds is defined as a holding period of more than 12 months. All gains made af...