Question : which is the best type of mutual fund that will minimize the income tax. What is ELSS?
I heard ElSS is the mutual fund option for reducing the income tax for a salaried employee. I wanted to know which company's funds are having good returns now?
- asked by nagesh M
All Answers:
Answer #1
stop worrying about income taxes and focus on themain job here -- investing to meet your financialplan.good returns now in a mutual fund are notindicative of good returns in the long run ... themarket is in a slump and leadership frequentlychanges between rising markets and slumping ones-- and vice versa.
- answered by Spock (rhp)
Answer #2
You should think a little about your motivesbefore deciding to make an investment decisionbased on "minimizing income taxes", because unlessyou are in the very highest tax bracket, such astrategy makes NO sense whatsoever!Think about it,would you rather put $100,000 in a fund that givesa taxable 10% yield? Or one that gives a 3%tax-free yield?
- answered by Thin Kaboudit
Answer #3
Equity linked savings schemeUnder section 80,Indians can invest upto Rs 1 lakh in ELSS (EquityLinked Saving Scheme, also commonly known as TaxSaver schemes) funds per year/per individual. Theamount invested in a ELSS/Tax Saver scheme is Taxdeductible on your tax return.Now, what is thecatch for investing in a ELSS scheme.(a) Yourinvested money is LOCKED for a period of 3 years.i.e., Once invested in a Tax Saver fund, yourmoney cannot be taken out for a period of 3 years.But this is a blessing in disguise, because TaxSaver funds generally yield healthy returns duringa 3 year period.(b) Except for the Pension planfunds which usually locks the money until the ageof 58 or so, all ELSS schemes invest upto a 100%in equities/stocks. Therefore, inherentlyinvesting in a ELSS is risky.Comparing equitymutual fund and a tax saving one, I would say Taxsaving funds generally perform better becausethere is less pressure on the Tax Saving fundmanager to SELL during down markets for redemptionto unit holders. With plain vanilla Equity MFs youcould buy them today and dispose of them tomorrow- i.e., there is no time limit for redemption,except for exit loads. However with ELSS MF funds,there is a compulsory 3 YEAR lock in for Equityfunds and a mandatory lock in up to the age of 58years for Pension funds.Contrary to the populartheories, ELSS funds also comprises of Pensionfund, such as Franklin Pension, which does notinvest more than 50 to 60% in equities.
- answered by Ramasubramanian
Answer #4
You can minimize income tax by investing in atax-exempt mutual fund (primarily municipalbonds). However, precisely because mutual bondsare tax-exempt and thus attractive to investors,they can be issued at a lower rate of interest (alower cost to the issuers). So you're payinglittle/no tax, but you're also getting less returnon your money.Tax-exempt investments are usefulfor people in fairly high tax brackets.Your goalshould be not to minimize taxes, but to maximizetotal return after considering taxes - which isnot the same thing. Good luck.
- answered by Erik
Answer #5
look at
http://www.ratekhoj.com/fixeddeposit/taxsavingsfixeddeposits/tsselsshome.php from the website
http://www.ratekhoj.com for details on ELSS andalso a complete list of ELSS mutual funds. youhave to use the links to see latest returns etc.
- answered by indoracle
Answer #6
ELSS refers to Equity Linked Saving Scheme. Youcan save Income Tax, if you invest in theseschemes, but the lock in period is 3 yeras if youwant to have tax gain benefit.The following linkwill give the idea of the return given by DSP-MLand Principal Tax Saving Fund.Compare them and seefor yourself which one suits you (depending on thetime you want to remaininvested.)
http://www.moneycontrol.com/india/mutualfunds/bestfunds/21/40/detailedviewOther than theabove, you can also visit the following site,which will surely help you in your mutual fundinvestment
http://www.valueresearchonline.com
- answered by sandevyl
Answer #7
Try the FAQ on Income Tax Act from the linkbelow
http://firstappeal.com/view_topic.php?id=815&forum_id=18
- answered by prakunna
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measure and fulfill your financial needs
