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Wealth Creation & Tax Saving
With ELSS
Invest Rs.1.5 lakhs & Save Tax upto Rs. 46,800/-* u/s 80C Invest Now (* For F.Y. 2020-21 & for Individual who comes under the highest tax bracket) ELSS Advantages
Higher tax adjusted return
As returns are market linked, ELSS has potential to deliver higher tax adjusted returns than traditional tax saving options
Stability in terms of
exit of funds
Due to lock in period of 3 years, the fund manager has the opportunity to invest for long term as he does not have to worry about sudden redemption pressure.
Lower lock-in
period
Compared to other tax savings avenues under Section 80C of the Income Tax, ELSS has the shortest lock-in period of 3 years.
Rupee cost
averaging
Investment in ELSS through SIP route helps in averaging out the cost of purchase.
ELSS V/S Other Tax Saving Products
| Particulars | PPF | NSC | Tax Saving FDs | Post Office Time Deposits | ELSS |
|---|---|---|---|---|---|
| Lock-In Period (Yrs.) | 15 | 5 | 5 | 5 | 3 |
| Rate of Interest (%) | 7.10% | 6.80% | 5.40%* | 6.70% | Potential to deliver higher returns as it is linked to market |
| Rates Applicable From | 1-April-2020 | 1-April-2020 | With Effect From 08-Jan-21 | 1-April-2020 | -- |
| Rates Applicable Till | 29-Jan-2021 | 29-Jan-2021 | 29-Jan-2021 | -- | |
| Compounding | Yearly | Yearly | Quarterly | Quarterly | -- |
| Taxation of Returns | Tax Free | Taxable as per slab | Taxable as per slab | Taxable as per slab | Capital Gains are Taxable @@ 10% $^# |
- * Rate offered by SBI Tax Saving Scheme FD
- $ Finance Bill, 2018 proposes levy of income-tax at the rate of 10% (without indexation benefit) on long-term capital gains exceeding Rs. 1 lac from equity shares and equity mutual funds provided transfer of such units is subject to STT.
- ^ In case of the long term capital asset acquired before 1st Feb 2018, cost of acquisition shall be deemed to be the higher of:
- Actual cost of acquisition of such asset
- Fair market value of such asset as on 31st Jan 2018
- # Dividend in the hands of unitholder is tax free but AMC will deduct 10% Dividend Distribution Tax plus applicable surcharge
- @@ 3 yr & 5 yr average CAGR return of all ELSS schemes as on 31st May 2018 is 10.80% & 18.39% respectively.
Returns Comparison between ELSS Schemes & PPF
The below table shows the value of Rs. 1 Lac invested in PPF, Sensex and various ELSS Schemes as on 31st May of every year. (Valuation Date : 31st May 2018) Note: Amount assumed Rs. 1 Lac in PPF & ELSS. However, deduction u/s 80C has been increased from Rs. 1 Lac to Rs. 1.5 Lacs w.e.f 22nd August 2014.| CAPITAL INVESTED () | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Scheme Name | 1-Apr-20 | 1-Apr-19 | 1-Apr-18 | 1-Apr-16 | 1-Apr-14 | 1-Apr-11 | 1-Apr-09 | 1-Apr-06 | 1-Apr-01 |
| 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | 29-Jan-21 | |
| 1.50 Lacs | 3.00 Lacs | 4.50 Lacs | 7.50 Lacs | 10.50 Lacs | 15.00 Lacs | 18.00 Lacs | 22.50 Lacs | 30.00 Lacs | |
| RETURNS GENERATED FROM VARIOUS ELSS SCHEMES | |||||||||
| Aditya Birla Sun Life Tax Relief 96 | 2,22,628 | 3,90,478 | 5,62,124 | 10,20,010 | 16,48,381 | 31,23,464 | 46,07,176 | 65,91,041 | 195,95,034 |
| Axis Long Term Equity Fund | 2,25,673 | 4,16,630 | 6,20,678 | 11,49,986 | 18,58,024 | 37,89,690 | – | – | – |
| BNP Paribas Long Term Equity Fund | 2,30,525 | 4,21,064 | 6,18,938 | 10,96,596 | 17,03,787 | 31,76,029 | 46,86,891 | 64,06,129 | – |
| Canara Robeco Equity Tax Saver Fund | 2,37,421 | 4,18,942 | 6,21,257 | 11,55,855 | 18,25,293 | 33,00,625 | 50,56,845 | 80,47,345 | 235,62,217 |
| DSP Tax Saver Fund | 2,48,324 | 4,31,947 | 6,29,470 | 11,30,040 | 18,18,308 | 34,06,967 | 50,93,736 | – | – |
| Franklin India Taxshield | 2,51,909 | 4,18,281 | 5,97,237 | 10,25,065 | 15,92,309 | 29,03,533 | 43,81,164 | 66,47,535 | 220,55,191 |
| HDFC Taxsaver | 2,38,026 | 3,91,379 | 5,53,637 | 9,57,125 | 14,54,676 | 25,31,311 | 37,59,434 | 55,46,699 | 224,27,723 |
| HSBC Tax Saver Equity Fund | 2,36,044 | 4,04,089 | 5,76,447 | 10,15,467 | 15,77,810 | 28,64,048 | 41,70,762 | – | – |
| ICICI Prudential Long Term Equity Fund | 2,47,463 | 4,20,480 | 6,08,299 | 10,69,438 | 16,62,577 | 30,63,805 | 47,20,873 | 69,82,748 | 280,90,925 |
| IDFC Tax Advantage (ELSS) Fund | 2,71,464 | 4,44,533 | 6,18,232 | 11,05,258 | 17,28,435 | 32,14,499 | 47,12,218 | – | – |
| Invesco India Tax Plan | 2,39,802 | 4,23,177 | 6,20,650 | 11,31,515 | 18,01,431 | 33,89,887 | 51,69,803 | – | – |
| Kotak Tax Saver Fund | 2,41,152 | 4,24,676 | 6,25,286 | 11,18,309 | 17,75,002 | 31,13,402 | 44,54,311 | 61,60,548 | – |
| L&T Tax Advantage Fund | 2,40,528 | 4,09,198 | 5,75,555 | 10,25,170 | 16,09,597 | 28,60,746 | 42,51,860 | 64,95,534 | – |
| Mirae Asset Tax Saver Fund | 2,59,867 | 4,55,080 | 6,72,856 | 12,83,505 | – | – | – | – | – |
| Motilal Oswal Long Term Equity Fund | 2,32,717 | 4,10,184 | 5,80,343 | 10,72,387 | – | – | – | – | – |
| Nippon India Tax Saver (ELSS) Fund | 2,33,897 | 3,79,990 | 5,19,126 | 8,59,684 | 13,17,899 | 24,71,891 | 37,48,133 | 55,93,994 | – |
| Principal Tax Savings Fund | 2,49,264 | 4,23,674 | 6,00,375 | 10,84,123 | 17,16,761 | 31,97,536 | 45,85,743 | 61,94,849 | 185,57,602 |
| SBI Long Term Equity Fund | 2,51,875 | 4,27,741 | 6,13,186 | 10,57,722 | 16,09,407 | 28,67,218 | 41,19,082 | 59,29,779 | 278,10,106 |
| Sundaram Diversified Equity | 2,40,260 | 4,03,899 | 5,70,130 | 9,94,211 | 15,44,987 | 26,95,256 | 38,28,171 | 56,39,513 | 209,53,590 |
| Tata India Tax Savings Fund - Reg | 2,39,093 | 4,12,269 | 5,96,919 | 10,78,273 | 17,36,993 | 32,30,329 | 47,97,753 | 68,96,791 | 216,23,796 |
| Taurus Taxshield | 2,30,468 | 4,00,211 | 5,80,250 | 10,70,141 | 16,49,612 | 28,28,236 | 40,65,873 | 62,28,583 | 171,88,960 |
| UTI Long Term Equity Fund (Tax Saving) | 2,49,604 | 4,36,504 | 6,33,070 | 11,13,984 | 17,06,349 | 29,59,044 | 41,59,081 | 57,85,068 | 149,65,534 |
| S&P BSE Sensex | 2,45,632 | 4,24,241 | 6,33,015 | 11,39,891 | 16,94,877 | 28,17,645 | 39,11,220 | 55,13,303 | 139,57,710 |
| Maximum | 2,71,464 | 4,55,080 | 6,72,856 | 12,83,505 | 18,58,024 | 37,89,690 | 51,69,803 | 80,47,345 | 280,90,925 |
| Minimum | 2,22,628 | 3,79,990 | 5,19,126 | 8,59,684 | 13,17,899 | 24,71,891 | 37,48,133 | 55,46,699 | 149,65,534 |
| Average | 2,41,728 | 4,16,565 | 5,99,730 | 10,73,357 | 16,66,882 | 30,49,376 | 44,40,469 | 63,43,077 | 215,30,062 |
| PPF Calculated at actual rates | 1,58,870 | 3,30,365 | 5,15,236 | 9,29,766 | 14,18,261 | 23,21,374 | 30,52,902 | 43,84,821 | 74,38,489 |
(Past performance may or may not sustain in future)
Disclaimer: The information contained in this report has been obtained from various sources. While utmost care has been taken for the preparation of this report, we do not guarantee its validity or completeness. Neither any information nor any opinions expressed constitute an offer, or an invitation to make an offer to buy or sell any fund. Investors should take financial advice with respect to the suitability of investing their monies in any fund discussed in this report.
Mutual fund investment are subject to market risk. Please read Scheme Information Document and Statement of Additional Information carefully before investing.
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