Are returns on ELSS tax free?

Why ELSS is tax-free? The redemption proceeds of ELSS are not entirely tax-free. The long-term capital gains of up to Rs 1,00,000 a year are tax-free, and any gains above this limit attract a long-term capital gains tax at the rate of 10\% plus applicable cess and surcharge.

What happens if you don’t withdraw ELSS after 3 years?

Due to this mandatory lock-in of 3 years, you can only redeem your ELSS investments either partially or in full after the completion of the lock-in period. If you have made your ELSS Mutual Fund investment via the lump sum route, i.e., at one go, all your units will be allotted on the same day.

How much should I invest in ELSS to save tax?

The investment in ELSS mutual fund schemes can be done either as a lump sum or via monthly systematic investment plans (SIP). By investing Rs 1.5 lakh in a financial year in an ELSS, an individual taxpayer in the highest tax bracket can save tax of Rs 46,800 (inclusive of cess at 4\%).

How do you declare ELSS in income tax?

If you are investing in an equity-linked savings scheme (ELSS) to claim the tax benefit under section 80C of the Income-tax Act, 1961, then do make sure that you have invested marginally more than the specified limit of Rs 1.5 lakh in a financial year.

Can ELSS be withdrawn before 3 years?

However, investment in an ELSS fund remains locked in for 3 years. It is the lowest lock-in among all available tax-saving products in India. Although an investor can not withdraw money from an ELSS fund before completion of 3 years of investment, one can pledge these units with a bank to avail loan.

Can I stay invested in ELSS after 3 years?

Yes, since the ELSS investment has completed five years, you can withdraw the first year’s investment and re-invest it. Long term capital gains tax would be applicable for capital gains of more than Rs 1 lakh in a financial year.

Can we stay invested in ELSS after 3 years?

For example, One can redeem the 60 units (NAV Rs. 500 and Rs. 30,000 invested on 1st Mar 2017) of mutual funds after 1st March 2020. However, if the investment is made in the SIP of ELSS funds, then the lock-in period shall end after three years of every SIP instalment.

How do I prove my investment for ELSS?

Investment Proof: You can get investment proof for mutual fund investments by getting your statements from your distributor. Alternatively you can get a consolidated email statement for all your mutual fund investments, including your ELSS funds emailed to your inbox.

What is the tax rate on ELSS returns?

A. ELSS returns upto Rs. 1 lakh are exempted from tax after the lock-in period of 3 years is completed. Returns exceeding Rs. 1 lakh levy Long Term Capital Gains Tax which currently stands at 10\%. Q. How do I invest in ELSS funds?

Should you invest in ELSS funds in India?

You must look at the scheme’s performance over the past decade in addition to the factors mentioned below before investing in ELSS Funds in India: Being the only type of mutual fund which invests in the equity market and offers tax benefits, many investors look at ELSS funds only for tax planning purposes.

Can I invest a lump sum in an ELSS scheme?

SIPs – While you can invest a lump sum amount in an ELSS scheme, most investors prefer the SIP method as it allows them to invest in small amounts and avail tax benefits along with an opportunity to create wealth. Additionally, you can invest as much as you want but can avail tax benefits as limited by Section 80C of the Income Tax Act.

How much can I invest in ELSS under Section 80C?

Under section 80C, one can avail tax benefit of upto ₹46,800 by investing upto ₹1.5 lakhs per year in ELSS. You can also invest more than ₹1.5 lakhs in ELSS, but tax benefit can not be availed on the investment exceeding ₹1.5 lacs.