The financial year 2015-16 has ended and with that, the tax paying deadline is also over. It is often observed that the clients pursue the tax saving plans by the end of the year, i.e., in February or March. It may have helped you till now, but it is a wrong practice which should not adhere. With the start of new FY 2016-17, it is time to take a financial resolution for the year to commence your tax planning from the first month of the new year. Mutual funds, as we all know, have served all the needs of every investor. Thus, mutual fund has the solution of the taxation problems which otherwise scare the investors. Schemes like Equity Linked Saving Scheme abbreviated as ELSS is one the best investing options that provide avenues for tax saving fund as well.

Availing the tax-rebate is a crucial part of the income-expenditure cycle. By investing your hard-earned money in ELSS fund, you become eligible for a tax rebate and at the same time you can give your money the desired growth. Capital appreciation in ELSS fund is possible because it is a type of diversified equity scheme. One more factor that magnetizes the clients towards ELSS scheme is the tax exemption on the long-term capital gains of that the clients get from it at the time of maturity.

Section 80C and ELSS

ELSS plan is categorized under the Section 80C of the Income Tax Act. According to, the guidelines stated in the section, a person is liable to get a rebate under ELSS on the basis of two criteria: (A) The income of an investor should be more than Rs. 2.5 lac (B) The relaxation amount cannot exceed Rs. 1.5 lac. ELSS mutual fund invest in an equity fund and at the same time imparts the benefits of capital gains by sharing the taste of market fluctuations. Generally, with a lock-in period of three years ELSS has been one of the most efficient tax saving schemes. This means that once invested, the clients are unable to withdraw their money from ELSS mutual fund before the stipulated time period of 3 years. If the clients redeem their invested sum, then they have to bear the exit load plus no tax benefit will be provided for that year (if you withdraw the money before paying the premium and tax).

ELSS scheme is undoubtedly more productive scheme than any other government sponsored tax saving plans. For example, PPF is one of the tax saving schemes provided by the government. A person can invest Rs. 1.5 lac in a year for the tax saving purpose. But, there is a lock-in period of 15 years, which means that the client cannot withdraw the deposited sum before that time spell. However, partial withdrawal is allowed after six years. Now, talking of ELSS mutual fund the customers can invest Rs. 1.5 lac in a year and there is a lock-in period of just three years associated with it. This means that the customer is free to withdraw the invested sum after the time span of three years.

ELSS fund is the top-notch scheme from the viewpoint of tax saving as well as capital gains. Dispensing the tax-benefit with an increased return over a short period, ELSS is speedily trending to become one of the most widely accepted methods for tax saving. The lack of awareness among the clients is an obstruction in its growth, but financial experts are using digital media as their tool for bringing cognizance among investors.

The investors who want to go in for capital appreciation, as well as tax saving, should opt for ELSS fund. Clients have an access to the dividend as well as growth option for getting better returns on their invested amount. The investors who do not want to lock their money in the long-term schemes, like PPF, he/she has the freedom to invest in ELSS fund. Altogether, ELSS mutual fund is the perfect choice for the clients who want to avail tax-benefit along with creating a corpus having within a short-term perspective.