This story is from August 30, 2017

Mutual Fund FAQs: What are tax saving schemes?

TIMESOFINDIA.COM / Updated: Nov 16, 2017, 12:24 IST

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Investing in tax saving schemes is an smart way to reduce your income tax liability. There are many ways you can reduce your tax burden using multiple tax saving schemes available such as Life Insurance, Pension Plans, Health insurance or Mediclaim, NPS or Tax-saving mutual funds.

Mutual Fund FAQs: What are tax saving schemes?

Investing in tax saving schemes is an smart way to reduce your income tax liability. There are many ways you can reduce your tax burden using multiple tax saving schemes available such as Life Insurance, Pension Plans, Health insurance or Mediclaim, NPS or Tax-saving mutual funds.
Here we will talk about tax-saving mutual funds that are also known as Equity Linked Savings Scheme (ELSS).Under the Section 80C Section 10(D) of Indian Income Tax Act, you can get exemptions up to a maximum of Rs 1.5 lakhs and the interest earned is also tax free.
Tax-saving mutual funds invest in stock markets, among other assets, and are more suited for investors with medium to high risk appetite. These funds offer the opportunity for capital appreciation through investments in equities while saving on taxes along the way. Also, long term capital gains from these schemes are tax free, while dividend options for such funds will enable capital gains even during the lock-in period. The typical lock-in period varies between 3 to 5 years.
An ELSS fund manager invests in a diversified portfolio, predominantly consisting of equity and equity related instruments that carry high-risk and have the potential to deliver high-returns. Since it is an equity fund, the returns from this scheme are market determined.