SOURCE : NEW18 NEWS
Last Updated:January 21, 2025, 15:00 IST
Tax experts recommend Equity Linked Saving Scheme (ELSS) as the best tax-saving option under Section 80C due to its market-linked returns of 11-12% annually and a short lock-in period of three years
As per tax experts, the ELSS is a much better tax-saving option under Section 80C of the Income Tax Act. (News18 Hindi)
It’s that time of the year again when you submit proofs for investments made to save on income tax. It’s also time to start planning your tax-saving investments for the upcoming financial year. While schemes such as National Pension Scheme (NPS) or LIC are popular, financial experts say an underrated scheme to invest in is the ‘Equity Linked Saving Scheme’ (ELSS), which also gives higher returns.
As per tax experts, the ELSS is a much better tax-saving option under Section 80C of the Income Tax Act. They state that to reduce your tax burden, apart from saving Rs 1.5 lakh under Section 80C, taxpayers should also take advantage of 80D (health insurance) and NPS under Section 80CCD. Additional tax exemption can be claimed on the contribution of Rs 50,000 to NPS.
related stories
Is ELSS A Better Option?
When asked about the better option among various tax-saving schemes like NPS, ELSS, National Savings Certificate (NSC) and Life Insurance Policy (LIC), Chintak Shah, Vice-President at Anand Rathi Wealth Ltd, said: “If it comes to claiming tax benefits under Section 80C of the Income Tax Act, then my choice is Equity Linked Savings Scheme.”
“There are two main reasons for this… First, ELSS investment is directly linked to the stock markets and has historically given long-term returns of about 11 to 12% annually. Second, the lock-in period under ELSS is only three years. That is, you can withdraw your amount after three years.” Shah added.
How To Invest In ELSS?
“This facility allows investors to withdraw their investment amount for consumption needs or reinvest it in a new ELSS to avail benefits under Section 80C. Thus, this combination of wealth creation and tax efficiency potential makes ELSS an attractive option,” Shah said.
Vivek Jalan, partner at consultancy firm Tax Connect Advisory Services LLP, said: “The choice of investment option depends on the individual’s risk-taking ability, need and goal. While the interest on products like NSC, PPF is fixed and the government announces it every three months, the return on products like ELSS is not fixed and their performance depends on the market conditions.”
Investments and tax-savings products under 80C include ELSS, PPF (Public Provident Fund), Sukanya Samriddhi Yojana, NSC, LIC etc, whereas NPS comes under section 80CCD.
