elss scheme mutual fund
This query is : Resolved
26 July 2010
whether elss scheme mutual fund will be taxable or not on redemption for a.y 2010-11.
31 July 2010
An ELSS (Equity Linked Savings Scheme) is a mutual fund that has to invest a minimum of 80% in equity shares. The balance 20% can be in debt, money market instruments, cash or even more equity. There is a three year lock-in period for the ELSS mutual funds. Post the 36 months, the funds remain invested and work like any other open-ended mutual fund.
Why an ELSS?
It has been an established fact that in the long run, equity gives a much higher inflation adjusted returns when compared with any other investment, except for maybe real estate. The top five ELSS funds have given returns from 22% to 26% compounded annually over the past five years. This is again higher than the market returns over the same period, which is at 19%.
ELSS is part of the Section 80C instruments that are cumulatively eligible for a deduction from income up to Rs 1 lakh. This gives tax payers benefits from 10% to 30% (excluding the educational cess) based on their current tax slab.
The return (maturity and the dividend,if opted for, from the ELSS is also tax free under the present EEE (Exempt-Exempt-Exempt) regime.
Why an ELSS?
It has been an established fact that in the long run, equity gives a much higher inflation adjusted returns when compared with any other investment, except for maybe real estate. The top five ELSS funds have given returns from 22% to 26% compounded annually over the past five years. This is again higher than the market returns over the same period, which is at 19%.
ELSS is part of the Section 80C instruments that are cumulatively eligible for a deduction from income up to Rs 1 lakh. This gives tax payers benefits from 10% to 30% (excluding the educational cess) based on their current tax slab.
The return (maturity and the dividend,if opted for, from the ELSS is also tax free under the present EEE (Exempt-Exempt-Exempt) regime.
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