ELSS : Best tax saving instrument – undoubtedly

elssELSS Funds – has become a generic term in mutual fund industry. If we look at the full form of this term it will say Equity Linked Savings Scheme Fund – sounds odd. 😉 Mutual Fund ELSS is a damn good tax saving instrument but still it is not used by maximum Indians. “In India there are close to 3.34 crore  individual taxpayers but less than 20% have ever invested in Mutual Fund ELSS.” This article will cover everything related to ELSS – It’s meaning, benefits, comparison with other instruments, SIP in ELSS and best ELSS to Invest.

Taxes grow without rain. Like it or not, you have to pay your taxes. The trouble is that understanding taxation requires more than a genius mind. Albert Einstein admitted, “The hardest thing in the world to understand is the income tax.”

You can ask your tax saving questions here

Tax planning is an essential part of your financial planning. Efficient tax planning enables you to reduce your tax liability to the minimum. This is done by legitimately taking advantage of all tax exemptions, deductions rebate and allowances while ensuring that your investments are in line with your long term goals.

What is ELSS Mutual Fund

ELSS are mutual fund scheme & are quite similar to diversified equity funds of Mutual Fund. As the name suggests, the scheme primarily invests in equity market by buying equity stocks of companies listed  on the stock exchanges.

The units of the scheme are offered at the NAV (Net Asset Value). The NAV is announced for all business days and keeps changing primarily depending upon the movement in the prices of stocks held in the portfolio of the scheme.

ReadMutual Fund ELSS Vs PPF – Save Tax & Make Money

Comparison of various tax saving instruments

elss funds

Apart from these, insurance premium on life insurance policies(you all know why insurance is mutual not there in above table) and principal component of housing loan are also eligible for Section 80 C benefit.

Benefits of ELSS MF

Tax benefit at the Investment

You can get tax benefit under section 80 C of Income tax. Maximum limit is Rs 100000.

Shortest duration

Lockin period of ELSS is 3 year which is shortest in comparison to any other tax saving investment. This lockin is the only difference between diversified equity mutual funds & ELSS.

Tax free return

Any profit/ capital gain you have from ELSS is completely tax free. If you see return from NSC & Tax saving Bank FDs they are completely taxable & added to your income. Only PPF Offers tax- free return but it has a maturity period of 15 years.

Tax free dividends

ELSSschemeskeeps giving dividend on regular intervals & the whole dividend you receive is tax free.

No entry Loads (Less Expensive)

Say if you invest Rs 10000 in ELSS Scheme your complete Rs 10000 is invested in Mutual Fund. You have to decide how much want to pay your advisor. BEWARE some insurance agents sell ULIPS as Mutual Fund + Insurance with lots of expenses.

High Growth

Equity funds can be volatile in the short run, but have been known to beat inflation and create wealth over the long run. If you are looking at investing some money that you won’t need future, and are willing to ride the ups and downs of the market, you may find ELSS an ideal tax saving option.

Actual Value of Rs. 1 Lac invested in ELSS

Equity Linked Savings Scheme

Returns as on 30 Nov 2010 – Average Returns of all ELSS schemes in the period

Best ELSS in India 2010 – 2011

Best fund comes out after postmortem so consider them as “Top 10 ELSS Fund in last 10 years”

Fund Name1-Y3-Y5-Y7-Y10-Y
Return (%)Return (%)Return (%)Return (%)Return (%)
HDFC Taxsaver25.067.7817.7329.3430.46
ICICI Prudential Tax Plan23.986.8615.425.1928.83
Sundaram Taxsaver11.22.0118.1426.626.41
Magnum Taxgain11.4-0.7216.0231.5824.32
Franklin India Taxshield22.645.4817.223.8524.19
Birla Sun Life Tax Plan14.61-3.0712.4320.4223.18
Tata Tax Saving16.390.612.6719.1923.1
Birla Sun Life Tax Relief 9611.81-3.4916.3620.521.11
Principal Tax Savings14.52-10.9511.6619.8420.73
Principal Personal Tax Saver15.49-3.9116.519.9820.62

Performance Comparison: As on  24th Dec 2010

Please note that past performance may or may not be sustained in future.

Points to remember while choosing ELSS Scheme, Short term Returns May be Misguiding so always look for 5-10 year performance of a fund.

Better returns in comparison to other tax saving instruments

Best debt tax saving instrument is PPF – it gives 8% tax free return so let’s compare PPF & ELSS

tax saving mutual funds

Current Value of Rs. 70,000 invested on 1 Jan every year from 2000-2010 in PPF and ELSS schemes – Returns as on 30th Nov 2010

ELSS Vs ULIP

Can you compare Sachin Tendulkar with Tatenda Taibu? So how can I compare ULIP with ELSS.

Systematic Investment Plan (SIP) in ELSS

In SIP, you invest a certain amount each month in a fund. It’s an effective way of investing in ELSS as the concept of rupee cost averaging and the power of compounding works well. Even if you have done your tax planning for this year start this from 1st April 2011.

SIP ELSS Performance

  • Investment Rs 5000 per month
  • Time – Last 74 Months
  • Total Investment – Rs 370000
SCHEME NAMEPRESENT VALUEReturnPROFIT SIPPROFIT ONETIME INVESTMENT
1Canara Robeco Equity Taxsaver – Dividend78750324.944175031336877
2HDFC Taxsaver – Growth72666422.253566641365076
3ICICI Prudential Taxplan – Growth68492120.283149211070301
4Sundaram Taxsaver – Growth68381120.233138111178489
5HDFC Long Term  Advantage Growth66596119.35295961922003
6SBI Tax Gain Scheme 93 – Growth66187719.142918771469557
7Birla Sun Life Tax Relief 96 – Dividend63030017.52260300825569
8Principal Personal Taxsaver61662516.8246625807317
9ING Tax Saving Fund – Growth57571914.53205719728567
10Birla Sun Life Tax Plan – Dividend57217314.33202173785124
11PRINCIPAL Tax Savings Fund53748812.26167488687264

Note: In new Direct Tax Code ELSS is not considered as a tax saving instrument – so use it before it’s actually announced.

https://www.tflguide.com/2016/03/when-not-to-invest-in-equity-linked-saving-schemes-elss.html

Always remember “Tax Saving should be result of your Investment planning and not vice versa”

Source & Credit: Some of the Data/chart used in the article are taken from NJ India Invest, Mutal Funds India & Value Research.
What’s your experience with Equity Linked Savings Scheme??

184 COMMENTS

  1. In DTC which kicks off from 2011-2012, is ELSS included? Am asking this as if anyone invests in ELSS mutual funds through SIP route and if its not considered from April 2011 then it would not help the individual to save taxes.

    • Hi Vats,

      Even I have mentioned regarding DTC in article.

      DTC is expected to be applicable from April 2012 – still 15 months left.

      If you have noticed we have not written a single post on DTC till date because right now it’s just proposed. There can be lot of changes in final draft.

  2. Hemant

    When the DTC comes into force, what will be the tax implication of return from investment in mutual fund?

    • Hi Gopal,

      As far as ELSS is concerned your ELSS investments will not be considered as Tax Saving investment – after announcement(April 2012) of DTC these will be treated as normal funds. In other mutual funds still there is not much clarity as earlier they proposed there will be long term capital gain & in revised version they have mentioned that long term gain will be tax free but equity dividends will be taxable. But still these things are just proposed – final DTC announcement may be totally different.

  3. This is such a good example and comparison of investment and returns. Hard time that it will soon be not considered for tax exemptions!

    On the contrary, what will you advise for an investment, tax benefits (anything that remains ever and no condition of not being considered for tax benfit just like ELSS), and a good return.

    • Hi Jashanpreet,

      I believe living in present so we should definitely use ELSS for tax saving right now.

      That’s the reason you will not find even a single post about DTC on TFL. DTC will change lot of things but we will talk regarding same in 2012.

  4. Hemant sir,

    very good article which has a detailed explanation of ELSS……

    has help me in improve my knowledge………

    thanks u sir…….

  5. Hello sir ,
    I want to start SIP ….. am jst now 22 years old earning 17000 pm…
    how much amount should i invest in SIP .??
    Should i go for SIP with ELSS…??
    please suggest best option for the same…
    thank you.

    • Hey Rajshree,

      Every penny that you can save & don’t want to use for any goal in next 5 years can go in Equity SIP.

      SIP in ELSS is a great way to save tax.

      You can start with HDFC Tax Saver(ELSS) & DSP BR Equity Fund.

  6. Hi Hemant,

    The article was wonderful but the sad part is i never understand about these taxes and savings. But after reading this article am thinking to start SIP in ElSS. I am 25 yrs old and earning 30k pm. what is the amount that i should save for tax exemptions and should i also go for HDFC Tax Saver(ELSS) & DSP BR Equity Fund.? My main goal will be buying a house as early as possible.

  7. Hi Hemant,

    I am still short of Rs. Rs. 15000-16000 investment for saving tax. If you are saying that ELSS will not be considered as tax saving fund after April 2012 so why you are still suggesting to take ELSS? If I invest in it directly without taking SIP because I have to show it in current year savings. I am planning to invest Rs. 10000 on the basis of your reply and pls. also advice in which fund I should invest rest Rs. 5000-6000.Pls. advice as soon as possible.

    Brgds
    Siddharth

    • Hi Siddharth,

      DTC is still proposed & not passed.(or there can be changes in final draft)

      “If you are saying that ELSS will not be considered as tax saving fund after April 2012 so why you are still suggesting to take ELSS?” We can still take it’s benefit in Current & next financial year.

      You can choose any fund from the above list.

  8. Hello Hemant Sir,

    Your article is very nice and I am looking forward to invest in ELSS. I can invest Rs.65000 to 70000 by 1st of aug 2011 for tax saving. But I am bit confused whether to invest in lumpsum or in SIP because most of u are discussing about SIP. Is it not right to invest in lumpsum since I dont require that money right now?

    And looking at the performance of HDFC tax saver, is it not right to invest all amount in HDFC Tax saver or should I divide my investment amount into 2 ..i.e HDFC tax saver and ICICI Prudential Tax saver?

    Awaiting for your reply..

    • Hi Manoj,

      Yes you can invest in lumpsum.

      You should invest in only 1 fund if you already have some investment in other diversified funds. If this is going to be only MF investment you should divide it into 2 parts.

      • Hemant sir,

        thnx for your reply..but if I invest in SIP format..then are SIP’s considered as tax saving?bcoz i hv read ur arrticles on SIP n found out that they r the simplest n best way of investment..So are these knows as tax saving SIP?

  9. Thanks Sir, for sharing your knowledge. Please guide me that suppose I invested in an ELSS scheme in March’11 and thereafter ELSS scheme is withdrawn as tax saving U/S 80 C in the forthcoming DTC BILL. Now, will I be getting the benefit for the 3 years lockin period or I have to withdraw my money. Its very cumbersome, please explain in detail

      • Respected Sir, Sorry but still I am not clear. Say, I have invested in an ELSS Scheme in the F.Y 2011-12. I will get the tax exemption for this while computing my taxable income for the year AY 2012-13. Now, suppose Sir, ELSS
        scheme is withdrawn from the financial year 2012-2013 in the forth coming DTC BILL. As, the ELSS scheme has a lock in period of 3 years, and I have completed only 1 year, because the scheme is withdrawn. Will I get the exemption for rest of the two Financial Years. Sir, it is most certain that in the DTC Bill, ELSS Scheme will no more be a tax saving instrument. considering this should I invest in ELSS fund.

  10. I have Rs 10 lacs and retired person. please best for tax free income as I am in taxable income even with pension.

  11. Hi Sir,

    I am from Andhra, Currently I am earning 20 thousand per month. I am saving the 20 k per year in treditional insurence plan. 18 k per year in the ULIP. I Just wanna save 1000 rupees per month either in SIP or ELSS. I dont know what will be the best. As per my family concern I have somany finalcial goals.

    Please suggest me best plan for best returns…..for 5 years, 10 years, 15 years and 20 year.

    If you need any info I can provide through mail.

      • Hi Sir,

        Thanks for your reply….

        Could you please explain about online mutual investing web fundsindia. They are providing it for free also there are many options to invest as per our flexibility. STP etc.

        Couldyou please do research on it and provide the info.

        Thanks.

  12. if i have invested in ELSS via SIP in April 2011,lock-in for 3yrs and
    in the next DTC that is Apr 2012, if Govt not considering ELSS as savings ,then also can we show them as savings in next year(ie 2012-2013) or they only allow for FY 2011-2012?

  13. hi sir,
    im 30 yrs.
    march 2010 i hve investd 20k ICICI tax gain.
    March 2011.
    i hve 25k in HDFC TAX SAVER.
    20 K AXIS TAX SAVER.
    25K in fedility tax advantage.
    now pllz suggest me tax saving instrumnt for 2011-2012.
    pllz suggest me that if SIPs r compulsry to invest till what time.
    my main purpose is to save tax.
    SIPs made in april 2012 not b considerd as tax savers..
    thanx.god bless u for help u do for all of us.

    • Hi Vijay,

      Thanks for blessings & good wishes.

      First please tell me why you have invested Rs 90000 in ELSS – if you are in job you already will be contributing 20-30000 in EPF.(Part of 1 lakh sec 80 c limit)

      For this year you should invest in HDFC & Fidelity tax saver.

      We will talk about DTC changes in 2012. 🙂

  14. hi sir,
    can i invest thru SIPs till 11 months only..i.e April 2011 to march 2012.
    pllz suggest best SIPs to invest,as i investd in above ELSS yet.
    sld i go for any ELSS i already investd or go for new ones..
    thanx.

    • Hi,Vijay

      As such in mutual fund you can enter anytime but if you exit within a year then u have to pay exit load.but if u have invested more than a year then u wont have to pay exit load.
      This require more data from you what is your goal and what is the time period you would like to invest,if u invest less than ayera or so you wont benefit anything in this market.

  15. Hi Hemant,

    I invest in PPF account around Rs/- 30-50 thousand every year.
    I have one HDFC Pension plan and invest Rs/- 1500 per month.
    I wanted to start some SIP of around Rs/- 5000 p/m.
    Please let me know some good banks which provide good returns.
    Three years back I had invested Rs/- 25000 in HDFC Tax Saver Growth Mutual Fund and this year got return of Rs/- 38,349.
    Should I again go for HDFC Tax Saver Growth Plan?

    Please suggest.

    Thanks & Regards,
    Abbas

    • Hi Abbas,
      It’s very good that you are investing regularly in PPF account which is undoubtedly best debt investment in long term category. You Pension plan not seem to be a wise decision but I will not write on it as we have already shared so much on that. Coming to your question on Mutual Fund SIP Investment – this is the best way to take exposure in equities. HDFC tax saver is good fund by my suggestion is you have some room to make proper portfolio. As you are already investing in PPF & pension fund – other than this if you are in job there will be EPF contribution or if you have kids you can show there fees under section 80 C. So I thing you don’t need to invest more than 24000-25000 in tax saver fund. So as you are planning to invest Rs 5000 monthly I will recommend Rs 2000 in HDFC Tax Saver, Rs 1000 in DSP BR small & mid cap and Rs 1000 in Templeton India Growth Fund.

  16. Hi Hemant,

    If we keep tax planning aside and think only about ELSS SIP for investment and better returns then which one is better : Diversified Mutual Fund or Tax Saver Mutual Funds and why?

    Looking forward for your response…

    Ashish

    • Hi Ashish,

      Undoubtedly Diversified equity funds – there is no logic in keeping your funds closed if this is not going to give some additional benefit.

      Yes it gives your agent more commission.

  17. Hi Hemant,

    I’ve read your above article completely and the queries asked by people too. I observed that you have been recommending to invest in only 1 fund if investor already have some investment in other diversified funds and if this is going to be only MF investment then investor should divide it into 2 parts.
    I didn’t get the logic behind your above statements. Kindly advise!

    • Hi Ashish,
      Just realised that I missed replying to so many comments on this article.
      Coming to your query – its because your tax planning should be part of investment planning. Now take example of 80 C – most of the people who are in Job will be contributing for EPF (let’s assume 30000 yearly) + some contribution to PPF (say 20000) + insurance premium & kids education (Rs 14000) – still you have room to invest Rs 36000 yearly (monthly Rs 3000). Now in investment planning you have decided that you need to invest Rs 10000 in Mutual Fund SIPs (including Rs 3000 for tax saver funds) – now you are having 2 choice:
      1st 3 diversified funds + 1 ELSS Fund or
      2nd 3 diversified funds + 3 ELSS Funds
      I will choose the first option.

  18. I am 27 yrs of age, Single and earning about 35000/- per month in one of the Metro Cities. I am currently contributing Rs. 1500/- per month to my EPF and investing Rs. 2000/- per month in SIP of “SBI Magnum Tax Saver – Dividend Payout” since July 2010. I wish now to invest 6000/- per month more for long term (say 10-20 yrs) and I am planning to divide this 6000/- into three equal part of Rs. 2000/- each to invest in SIPs of three different Tax Saver Products as below:
    Rs. 2000/- in HDFC Tax Saver – Dividend Growth (AMC 1.75%)
    Rs. 2000/- in ICICI Prudential Tax Plan – Dividend Growth (AMC 2.5%)
    Rs. 2000/- in Other Product as – Dividend Payout. (AMC 1.75%)

    I would like to invest 3rd part (Rs. 2000/-) as Dividend Payout so that received Dividend can further be invested in Debt Fund (PPF).

    Is it possible to keep continue to invest in monthly SIP for long term of more than 10 yrs. Or I have the only option of 3 yrs and can hold the corpus till the time I want (say 10-20 yrs).

    Kindly advise if I need to make any change in above plan and advise the three correct products for my portfolio.

    Regards,
    Ashish

      • Hi Hemant,

        Thanks for the reply!

        However, I already invested as below in absence of your reply in last few months. My current financial portfolio is as below:

        (1) Rs. 2000/- monthly in SIP of SBI Magnum Tax Saver for tenure of 3 yrs.
        to avail the tax benefit
        (2) Rs. 2000/- monthly in SIP of HDFC Tax Saver for tenure of 3 yrs.
        to avail the tax benefit
        (3) Rs. 2000/- monthly in SIP of Fidelity Equity Diversified Fund for tenure of 25 yrs
        to avail the long term benefit of SIP MF
        (4) Rs. 2000/- monthly in ICICI RD account for tenure of 3 yrs.
        to fulfill my short term financial plans and as the interest and maturity is completely tax free
        (5) PPF Account – Investment of Rs. 40,000/- a year
        (6) Life insurance is still not planned as I am currently single. However, planning to take Term plan of Life Insurance and Accidental Insurance once I get married.

        I would request you to take few minutes and calculate the health of my financial investment done till now and advise How can I make it more healthy for future perspective.

        I would also request you to advise for my insurance plan. Am I correct here or do I need to make some changes in my planning here for better future and security perspective.

        Keenly waiting for your response…

        Regards,
        Ashish

        • Hi Ashish,
          Your MF investments looks OK – just you can rethink about SBI tax.
          I am not sure about this “as the interest and maturity is completely tax free”.
          You must go for accidental insurance asap – term can be taken once you have dependents.

  19. Hi Hemant,
    I am reading your articles every day. You have really explain each and every thing very nicely.
    Kindly go through my case and advice me accordingly.
    I am 26 year old.My monthly income are 22000.I have invested in ULIP plan since march’11.
    Now further investing a single amount i would like to have your advice before.
    I am keen to make my complete financial plan with its implementation strategy.
    Please advice me how do i go ahead.
    I am confused about various investment option.

  20. sir, i follow your guidelines very intresting thank u sir, my friend interested to invest every month Rs.2000/- per month in shares how to elect midium range shares. please give best suggesstion.

  21. Dear All,

    I have doubt in my mind that for exmaple I invest 20000 lumsum amount in the
    HDFC TAX saver (G) fund having folio no. pz12345/78 on 1jan2011 . In the next year I again invest 20000 lumsum on 01JAN2012 in the same folio no. Now net amount invested is 40000. And as we know that it has a lock in period of 3yrs.

    After 3yrs can i withdraw this amount.

    What my mean is 20k I invest in 2011 and 20k I invest in 2012 . So which date is applicable from starting or from the day of investing date to withdraw from any ELSS fund of 3yrs lockin.

    Regds,
    Munish K. singh

    • Munish,

      Each investment into an ELSS fund would have a lock-in period of 3 Years. So investment of 20K on 1st Jan 2011 would have a lock-in period till 01st Jan 2014 & investment of 20K on 1st Jan 2012 would have a lock-in period till 01st Jan 2015. Hope it has clarified your doubt

  22. Hello

    A very illustrated article on tax planning thro ELSS. Thanks for the same

    I am 22 year old salaried executive in job for last 10 months.

    I am contributing about 3000 pm in EPF (including 1000 pm additional, beside 2000 compulsory contribution). In last FY I invested 30000 in NSC for tax planning but later I learnt that interest and maturity amount are taxable. So, I am not planning to invest in NSC this year. Though interest income become tax free in virtue of being reinvested. But maturity amount after 6 years is taxable and included in your total income and taxed accordingly in that Assessment Year. Is this true. Please clarify. If so, then why NSC is called a tax saver, saving tax @ 10-20% and paying tax after 6 years @10-20-30%.

    I do not find PPF interesting because of a very long lock in period (15 years) and low yields (you also show this in a graph), in this article.

    I wish to invest in ELSS even DTC MAY BE in force next year. I am planning to invest, 20-30K each in HDFC saver, ICICI Prudential Tax Plan or Canara Robeco Equity Tax Saver. I do not have any investment in MF.

    Thanks

    Saumya

    • Hi Saumya,

      You don’t know the benefits of PPF account. It’s not only about taxes but it is savings-cum-tax-saving account and it’s not about lock in of 15 years. But 15 yrs is tenure of the account and extendable for block of subsequent 5 yrs if you want.

      A withdrawal is permissible every year from the 7th financial year of the date of opening of the account. Only if the amount does not exceed 50% of the balance at the end of the 4th preceding year, or the year immediately preceding the year of the withdrawal, whichever is lower, less the amount of loan if any. There is no tax on the amount withdrawn. The withdrawal can be used to reinvest in the PPF account.

      The very interesting thing here is : Balance in PPF account is not subject to attachment under any order or decree of court. But, Income Tax authorities can attach the account for recovering tax dues.

      Ashish

    • Hi,

      I’d think that the presumed low interest rate (8.5%) isn’t that low actually! The interest earned on PPF in any year is reinvested and you thereby get 8.5% interest on the amount you invested + the interest you earned (i.e. compounded interest).

      Cumulatively, this amounts to more than what you think it would.
      Please take a look at the following table, which illustrates the return on a modest investment of Rs.10000/- per annum in a PPF account:

      Year Investment Final Returns
      (10k/p.a. + 8.5% returns)
      1 10000 10850
      2 20850 22622.25
      3 32622.25 35395.14125
      4 45395.14125 49253.72826
      5 59253.72826 64290.29516
      6 74290.29516 80604.97025
      7 90604.97025 98306.39272
      8 108306.3927 117512.4361
      9 127512.4361 138350.9932
      10 148350.9932 160960.8276
      11 170960.8276 185492.4979
      12 195492.4979 212109.3603
      13 222109.3603 240988.6559
      14 250988.6559 272322.6916
      15 282322.6916 306320.1204

      If a total investment of 150K over a period of 15 years earns you 300K, it isn’t too bad 🙂

      • Hi Dhruv,

        100% agree with you. PPF account is one of the best account one can have for saving, tax saving and secure amount.

        I am also fan of this account and have this account for last 8 yrs and investing ample amount every year.

        It’s right that investment of just Rs. 10,000/- per annum for tenure of 15 yrs will accumulate the corpus of more than 3.0 lacs at the end of tenure of 15 yrs. So how about investment of Rs. 70,000/- per annum. It will really make a large amount around 22 lacs.

        However, PPF comes under the debt fund investment which gives you the fixed rate of interest where you need not to worry for loss. But as per my understanding, for long term goals (more than 5 yrs), one should go for equity fund (Mutual funds SIP not the direct equity). Equity will really be giving you the returns more than your expectations if invested for long term.

        Finally, my understanding says that one should invest both in debt fund and equity fund for their short term and long term goals respectively. Allocation of fund into the debt and equity should be balanced to fulfil your need and security.

        What do you all think?

        Regards,
        Ashish

  23. Hi

    I want to know (the position as on date)

    1. Whether tax implications are same or different, on redemption amount of ELSS and MFs. If different then please mention the differences. And which one is better in view of tax planning (beside 80C exemption)

    2. What is the difference (in tax implications) in DIVIDEND and GROWTH types of ELSS and MF and which one, one should choose in view of tax on return and redemption, if in 20/30% bracket.

    3. @ Ashish – You replied – “Undoubtedly– there is no logic in keeping your funds closed if this is not going to give some additional benefit”

    What are the additional benefit that diversified equity funds provide.

    Thanks

  24. Hi Umesh,

    (1) Dividends / Maturity amount in both ELSS and MFs are tax free however, ELSS investment can be used to avail the tax benefits of 80C section and MF (diversified) investment is not applicable for 80c benefit.

    (2) There is no more difference in Growth / Dividend reinvestment / Dividend Payout. Tax implications are same for all. There is no tax on return. However, I suggest for Dividend Payout MFs so that you can use dividends or if not required then can be re-invested in debt funds like PPF.

    (3) I didn’t reply that “Undoubtedly– there is no logic in keeping your funds closed if this is not going to give some additional benefit”. It was the reply by Hemant to me. If you are already have in excess investment under 80c then go for diversified MFs as there is no lock in. You can withdraw your money any time you want.

    Ashish

    • Hi Ahsish

      Thanks for your prompt reply.

      What I understand from your reply is

      The returns (dividends, if any) from diversified MF and ELSS are tax free, the redemption amount is not taxable (there is no long term capital gain tax, whatsoever, when redeemed) and only ELSS qualifies for 80C deductions. Yes, when dividends are tax free then I will opt for dividend option. (please correct me if there is any error)

      Actually I referred my post to webmaster. So, I used the words “you replied” Anyway, your reply clears my doubts. Thanks again..

      One more query, Is Saumya right, when she wrote, about NSC, that the maturity amount is taxable in the year of maturity.

      Umesh

      • Hi Umesh,

        Regarding NSC, I know that interest income is taxable. However, Maturity amount is taxable or not. I am not sure. As per my understanding, Only interest amount is taxable not the principal one. However, let us get it clarified from Hemant.

        Hi Hemant,

        Please clarify on this.

        Regards,
        Ashish

  25. Hi,

    I have my SIP started for birla sunlife tax relief 96 in 2008 and in oct 2011 3 years of locking will get over……..m planning to continue this SIP for another 5 to 7 years please advise whether my decision is right or wrong

    • Hi Mihir,

      You mean to say that you have an SIP which was started in Oct 2008 for 3 yrs and getting completed in Oct 2011. My understanding says that you can’t withdraw this whole money in Oct 2011 as you have lock in of 3 yrs. However, if you want you can only withdraw 1st installment not all. If you want to get complete money back then you need to wait for 3 more year to get the lock in completed for all your 36 installments.

      Regarding Extention : My understanding says that it’s good decision to go for this as SIP is always King in terms of best investment portfolio.

      Ashish

  26. Hi Hemant,

    I would request you to advise your opinion / thoughts / analysis for the below mail and TATA MF product (Mentioned below).

    would appreciate if you could share a detailed article over this or else your advise would also be sufficient for me.

    Regards,
    Ashish

    • Hi Alok,

      I am surprised to read your query here specially on this page!!!

      I don’t know why are you asking this question even after going through this great article on ELSS on this page.

      One must avoid FDs if their objective is to get 80C relief. FDs can’t be the right option for actual 80C relief.

      You must go for ELSS without any more delay before it may vanish from April 2012 🙂 🙂

      Regards,
      Ashish

  27. Hi Hemant,

    One more query :

    As we know that in the current fiscal year, there is one more income tax provision that if one buys Infrastructure Bonds (Up to 20,000) then he/she will be getting the exemption from tax for that amount.

    I’ve heard that income from this product is taxable. Is it correct ?

    And also advise if it is worth buying product or shall we avoid it.

    Thanks in advance for your response.

    Regards,
    Ashish

  28. if you are looking for getting tax benefit for an investment locked in for 3 years in Infrastructure Bonds then people who fall in tax slabs of 1.6-5Lakhs should not invest in Infrastructure Bonds. If you are in the tax slabs of 5-8Lakhs then think of only upto 3 years period investing in Infrastructure Bonds and not for 5 years and people in the >Rs 8 lakh taxable income slab they are the highest benefited from Infrastructure Bonds and can invest for long term.

    • Hi Ashish,

      yes you have heard the right thing that Interest income from infrastructure bonds are taxable.
      from my point of view I think its not worth buying Infrastructure bonds

  29. Tinks,

    Your reply doesn’t answer my query.

    Can you provide the detailed and required answers.

    Hement,
    Can you please help in this regard?

    Thanks!

    Regards,
    Ashish

  30. Hi Hemant,

    My age is 27, recently married. I can easily invest 25000 /- Per month. I am planning to invest 5000/- every month for 15 years for my Child Education in SIP, 5000/- every month for 20 years for my Child Marriage in SIP, 5000/- every month for 25 years for my retirement in SIP, 5000/- every month for 20 years as a insurance premium & 5000/- every month for 10 years in SIP for investment. Kindly Guide me is it the right decision of mine ? or if not, then kindly recommend me the same ? Also tell me which are the best MF to invest ?

  31. Hi Amit,
    It’s Good that you are thinking for your child future goals and for your retirement and for that you are planning to invest 25000pm through Sip,but its not mentioned clearly how much you would require after 15 years for your children eduction and same for others too.
    I would suggest you too reach to a financial planner to meet all your requirements.

  32. Hi there
    I am lloking for investing in SIP’s. And I would like to invest in 3 different funds. Can I select one fund as ELSS but let me tell you I wont be getting any tax benefit out of it cos I have already reached the limit under 8OC. Would it be good to look at ELSS as one of the funds to invest in. One more thing,if you have some money that you could invest is SIP then what is mor advisable – investing a larger amount in lesser funds(say 2) or lesser money in more funds(say 4).

    • Hi,
      Vijay Let me tell you when the direst tax code will come then u cannot take exemption under ELSS and if you are fully exhausting 80C then you should not invest in ELSS.
      Secondly, I will tell you to invest in more funds with less amount that will make your portfolio diversified and you can invest ELSS amount in MF.

    • but elss schemes are also giving competitive returns i have had a good experience with icici tax plan so what if i keep that fund too in my portfolio even if that is not going to contribute towards my tax savings

  33. I have SBI Magnum Tax Gain Growth of Rs 20000/- of dated December 2007 and now it is having value around 15999/-, a loss of 5000 nearly. Is it wise to invest in it again at current NAV or should I purchase a new another one. Plz clarify me.

  34. Hello Dhiraj,

    Yes, SBI Magnum Tax gain’s performance has not been upto the mark..Many experts feel that.even though the market condition is volatile at present, SBI Magnum’s performance has been questionable..Few years back it was one of the top performing ELSS funds but that is not the case anymore now.

    My personal opinion on this is that at present you stick to this fund. When your fund value will be 20000/- then you take out your money from this fund. If you want to invest on ELSS funds then you go for SIP with funds like Fidelity tax advantage n Canara Robeco Eqty tax saver.

  35. Hi Dear,

    1. Recently i had started investing Rs 6000/- Per Month (Sip) in ELSS HDFC Tax Saver (G) . I want to invest for at least 10 years continuously. Please guide me is it the right fund to invest ? or should i Change it ?
    2. I had also started Sip of ICICI Prudential Regular Gold Fund of 6000/- Per month. Kindly guide me about this fund also?

  36. Hi Amit,

    No..HDFC Tax saver is not the right fund to invest for 10 years because its almost confirm that as per the Direct Tax code ELSS funds will not be considered as tax saving funds from April 2012 onwards..So, you can continue your investment in HDFC tax saver till 31st march 2011.. n then move on your investment to some other equity diversified funds…

    Please check the link below :
    https://www.tflguide.com/2011/07/best-mutual-fund-for-sip.html

    As far as your second question is concerned, I think Hemant or Anil can answer it..

  37. Hi,

    The Propose for both the Sip is having a good amount of money after at least 15 years for my Child’s education & Child’s Marriage. I had calculated that by investing 6000/- Per month each in both these funds for at least 15 years at 12% return & 8% inflation, I will be able to fulfill both my goals….Kindly tell me are these the right funds for my goals?

    • Hi,
      Amit,I think that your purpose is right i.e. for higher education of your child & marriage.I must say that you are not in right track of your investing.I will recommend you to meet a financial planner who can understand your goals and other goals like retirement or holidays,who will help you to achieve that goals.
      Hope you will meet financial planner in your area.

  38. Hello Amit,

    You need to rethink on your portfolio strategy n have to make lot of changes. If you are investing 12000/- per month then you need to have proper diversification in your funds like large cap funds, small n midcap funds or multicap funds.

    According to me neither of those funds you selected are good enough to reach your goals. By my personal observation, here are a few funds that I selected for you.

    1) HDFC Top 200 – 4000/-
    2) ICICI focussed Bluechip – 3000/-
    3) Reliance Equity Opportunities fund – 3000/-
    4) IDFC Premier Equity – 2000/-

    This portfolio will give proper diversification in all categories of funds.

  39. Hello Manoj,

    Till today, i had paid only one month SIP for both funds. Can you please guide me how i can change from these funds ? As in HDFC Taxsaver there is a locking period of three Years, so can i still change it now ? & if i stop these funds & start new one, will i get back my Rs. 12000/-????

  40. Till today, i had paid only one month SIP for both funds. Can you please guide me how i can change from these funds ? As in HDFC Taxsaver there is a locking period of three Years, so can i still change it now ? & if i stop these funds & start new one, will i get back my Rs. 12000/-???? Please advice me ????

    • Hi Amit,
      I think u should not invest a single penny into this funds after the locking period is over you can take out your money.

      As I have said you to go to planners bcoz they are the right person. I cant suggest you the right funds because it take a lot of time to study those funds and whether those funds will meet out your goals requirement or not this is also the big question.

  41. Hello Amit,

    If your idea is to save tax then you can continue with HDFC tax saver till 31st mar 2011. But if your idea is purely based on investment then you need to exit from these funds n move to equity diversified funds.

    If you stop HDFC tax saver now then the amount you invested can be only taken after 3 yrs i.e after the locking period is over and depending on the fund value you get after 3 years. You can exit anytime from Gold fund.

    So there is no need to panic yet as you have not invested a large amount of money..you can still make some changes now. The above 4 funds I mentioned are good enough for you to start your investment in a new way.. or else you can find a few more funds on the post ” Best Mutual fund” by Anil n Hemant.

    Go to your nearest mutual fund office n let them know about your decision.

  42. Hello Tinks,

    Thanks…..I will invest in HDFC Tax saver till 3 years are over, after that i will withdraw all my money after 3 years. I will stop Gold Fund immediately & will invest this money as a SIP in Diversified mutual funds….

    • Amit you don’t have to invest it for three years you just have to stop the sip from the next month and same as with the ICICI .

      Hope you are getting my point ?

  43. Hello Amit,

    I dont think you understood how ELSS tax saving funds work. If you invest in HDFC tax saver for 3 years then you cannot take your entire amount after 3 years. It depends on the SIP date.Suppose you invested 6000/- Rs. in oct 2011 then you can take the amount in oct 2014. The SIP date of 3 years has to be completed.

  44. Hello Manoj,
    Suppose i Started investing Rs 6000/- Per Month as SIP in Oct. 2011 & till Oct. 2014 i deposited Rs. 6000/- contineously every month i. e total Rs 216000/-. So according to you i cant withdraw all the money on Oct. 2014, Coz i have to complete the 3 year locking period of every SIP. According to you i can withdraw all the money approx. after 6 years. M i Right Dear?

  45. Hello Tinks,

    I had deposited only one SIP in Gold fund till Date of Rs 6000/-If i withdraw the Gold fund with ICICI immediately, then How much money will i get back & In how much time will i get back this money ?

    • Amit, the whole procedure is long enough you have to give a Request of Sip cancellation and then you have to fill a form for redemption.this whole procedure will take atleast a month.

      • @Tinks : I receive all the notifications for any single comment on this page. I read all the inputs from all the participants. I have been observing that you are jumping into the conversation. Jumping and participation in conversation is good within certain boundaries. But your intention of jumping into conversation seems to be something different. I feel, you are not advising the proper and appropriate input to people but you are making them confused. I have also requested you earlier not to make any confusion among readers. The objective of TFL and this page is to literate people not to confuse. I hope the inputs from you which can fulfill the query of askers.

        @Amit, I would like to say that we are living in very modern and high tech environment. Can I ask you – why don’t you go the official office of your mutual fund house and tell them what do you want. I believe, cancellation, redemption, movement and any other work will take just few minutes. We are not living in 70s or 80s where we would have been waited for long time. Today’s life is very high tech and modern where you request can be performed just in few minutes. But yes, credit of amount to your account might take 3 days if mutual fund house and your bank are not a part of group companies.

        For investment, I would suggest you to make small small investments at various mutual fund houses in order to make your investment diversified. Invest in Mutual funds for long term (5 yrs, 10 yrs, 15 yrs, 20 yrs, 25 yrs).
        Also invest in PPF which is the best debt fund investment where account tenure is 15 yrs and certain amount can be withdrawn after 7 yrs. You will get guaranteed 8% return in PPF investment. Other investment can be Bank RD (Recurring Deposit Account) for fulfilling you short term goals. You can start invest in ELSS fund too till the end of current fiscal year in the purview of DTC.

        Let me know if you have any further query.

        If I am unable to clarify your dbouts, we can further request Hemant Sir to help us to get things clarified.

        Regards,
        Ashish

  46. Hello Tinks,

    Can i switch From ICICI Pru. gold fund to ICICI Focussed Bluechip fund ? So that the money that is invested in ICICI pru. Gold fund automatically carries in to ICICI Focussed Bluechip fund. If yes then, is there any charges for Switching ? N Whats the procedure ?

  47. Hello Tinks,

    Can i switch From ICICI Pru. gold fund to ICICI Focussed Bluechip fund ? Will the money that is invested in ICICI pru. Gold fund automatically carries in to ICICI Focussed Bluechip fund.?????

  48. Will it be good decision to invest in any tax saving SIP from next month onwards considering the DTC ? I want to invest for tax savings. Plz advice.

    • Hi Raj,
      Will like to tell you if your major concern is on tax saving purpose then you can open PPF A/c which will provide you deduction as well as interest @ 8 %.
      and if you want to invest in Tax Saving SIP you can go for that too.

  49. Hi Hemant

    Thanks for your valuable inputs on ELSS in this forum. However, I have another query. Kindly respond.
    Although investments made in ELSS in FY2011-12 would be eligible for tax exemption under Section 80C, what is the provision under DTC for income from this investment? Whether dividends/long-term capital gains earned from ELSS investmens could be taxed in future? Which of the options is better to invest in this year – dividend or growth?

    • Hi Nidhi,

      Your query is very good and valid.

      You are right that one will be benefited in terms of tax by investing in ELSS products by 31-Mar-12.

      After that, DTC might come into existence. As you are asking the provisions under DTC for income from ELSS investment. I believe, this is not the right time because DTC is still just a proposal until the finalization of bill.

      Regarding your query of options for Dividend or Growth. I would say, there is no difference in Growth and Dividend Reinvestment. However, there is a difference in Growth and Dividend Payout. If you want to receive Dividends periodically from your investment you can go for “Dividend Payout” else, you can go for any of “Growth” or “Dividend Reinvestment”.

      Let me know if it clarifies your query.

      Regards,
      Ashish

      • Hi Ashish

        I understand that DTC is still just a proposal. But I wanted to know whether its current provisions (albeit in draft stage) include taxation of dividend or long-term capital gains from ELSS?

        • Hi Nidhi,

          I have no more idea for the current provisions in draft stage of DTC.

          Hi Hemant,
          Kindly advise Nidhi on her query.

          Regards,
          Ashish

    • Hi Praveen,

      First you need to decide whether you want to invest in ELSS fund or Diversified Funds or Sectoral Funds or any other fund.

      However, below are few of best products you might choose :

      ELSS :
      (1) HDFC Tax Saver
      (2) Fidelity Tax Saver

      Diversified :
      (1) Fidelity Equity Fund
      (2) HDFC Equity Fund
      (3) ICICI Blue Chip focused fund

      Regards,
      Ashish

    • Hi praveen,

      You should start a monthly sip of 1000 as u said in HDFC top 200.

      As u said you want to invest Rs 1000 monthly you should start investing in HDFC Top 200.

  50. Sir,
    I am 34 year old and my monthly income is 32,000.
    I have 1 Jeevan Anand of yearly premium Rs 24,000/-
    1 Jeevan Saral of 20,000/- yearly premium
    1 max ulip of yearly premium 20.000/-
    1 max ulip of yearly premium 10.000/-

    1) Sir, Please suggest 1 best term plan for my wife who is 27 year old for 1 crore cover
    2) I want to start monthly SIP for the first time, dont know where to go and how to start.
    3 ) Sir, I want to invest 5000/- monthly in sip elss than which fund should i choose

    Thanks a lot to your patience and kind guidance for people like me.
    Sir, one thing what I realise ” Earning money is difficult, but keep the earned money in right place and in right way , in right form is again much difficult than the earning ”
    Thankq for transferring money mantra to common people

  51. Sir, I have 1 Life amker premium ULIP of Max newyork, where I am paing Rs.20,000/- yearly premium since last 4 year. At the time of purchase, I had choose groth super fund. Now NAV of groth super fund is 14.57 where as NAV of Groth fund is 28.33. What I will do ? wheather change my option to groth fund ? How to track, which fund is good ? is it market dependant ? How can I anticipate before ?

    Now my total unit is 4248.28 at NAV 14.57 = 61897.44
    If I would have choose groth fund than it would have more value

    please guide me and suggest me the right path

  52. hai hemant ji

    I am 32 years old person working in a state govt. My annual income is four lakh eighty thousand INR. I am about to marry, and I have already taken one term insurance policy called, Jeevan anmol. I am planning to invest more, and am bit confused between Diversified SIP and ELSS SIP…like which one is better, HDFC top 200 (G) or HDFC Taxsaver – Growth/HDFC Long Term Advantage Growth??? What else I can do with my income in a better way, would like to know your tips….please suggest me!

    Regards
    Ranjit

  53. Dear Hemant
    Pls clarify if one lac cap in tax exemption under section 80C implies that maximum deduction of taxable income for Income tax calculation cannot exceed I lac and like in my case where i have takne a housing loan and yearly interest portion of EMI is exceeding Rs 1 lacs than their is no use and need for going in for any other tax saving investment .

  54. Hi Hemant,

    I am new reader of articles in TFL and all were awesome and very much eyr opener. I am 31 years old salaried guy and absolutely new in investment field. I want to start investment with intial amount of Rs 50,000/- and subsequently Rs 4,000/- Per month. I can invest monthly Rs 4,000/- till next 5 years after that my financial liability will get hiked. Requesting you to guide me in my investment initiation. I can go with any scheme (ELSS/ SIP/ or others). Kindly suggest me specific investment company name also.

    Thanks in advance.

    Regards,
    Praveen

    • Hi Praveen,
      Thanks for appreciating our efforts & encouragement from readers keeps us motivated for good job. As you have mentioned that you are new to investment world & it is also visible from you comment. You have ELSS, sip or others in one category – ELSS is only for the tax purpose & SIP is way to investment in mutual funds. My suggestion is before making any serious investments you should learn more about investments. For now you can invest Rs 5000 in bank deposits, start 1 year bank RD with Rs 3000 & you can invest Rs 1000 in HDFC Prudence with SIP route.

      • Dear Hemant,

        First of all thanks a lot for your suggestions. As you mentioned Rs 5000 invest in bank deposit, I want to invest primarily Rs fifty thousand (50,000). Shall I go for Non convertable debnture?
        Today I got a advertisement mail from Karvy stock broking about NCD of Muthoot finance offered cumulative return of 13.43% pa for the period of 66 months.

        Would it be worthy to invest in it? If yes how much I shall invest (Full amount of Rs 50,000/- or partial?
        Is there any risk to invest in it?

        Regards,
        Praveen

  55. Hello sir ,
    I want to start SIP/ELSS ….. am jst now 21 years old earning 14000 pm…
    I can invest Rs 4000 p.m
    I’M not comfortable with lumpsum investment
    I can pay this amount only for 3 years as I need funds around Rs 250000 for my MBA after 3 years.
    Should i go for SIP with ELSS…??
    please suggest best option for the same…
    thank you

  56. Can one invest inELSS this year ? I am 49 years old & I have already invested the required requisite amount of Rs100,000 in PPF, Life Insurance, and Mediclaim. So can I invest some more into ELSS Schemes just as the returns seem very good ? Will I benefit from such a move?If so how much do you suggest I should invest? Thanx
    –Sanjeev

      • Hi Hemant Sir,

        Kindly advise the reason of buying infra bonds.

        As per my understanding, infra bonds are not applicable for tax saving in current fiscal year 2012-13.

        Secondly, Income from Infra Bonds are taxable so that should not be preferable.

        Sorry if I am wrong.

        Kindly advise and correct me.

        Ashish

  57. Hi Hemant.
    Thanx for the advice. Could you please recommend some diversified equity funds to invest in and how much?
    Thanx
    Sanjeev

  58. Hi Mr. Hemant,

    Nice article.. But I am having a different case to discuss. I already have invested my eligible amount to be considered for tax excemption under 80C which is recurring also (I will have to live with the same every year).

    Now, I want to invest some more money to gain pure profits (No Cover, No tax savings, only profit).

    What can be the best instrument for me?

    I am aiming to purchase a house also in near future.

    Waiting for your reply..

    Regards
    Balram

  59. Hi Hemanth sir,

    I am working in MNC company. My salary per ann 5.5lakhs. We dont have any personal loans. I have two lic policies. one year policy(5000rs) and another one (20000rs per year). Pls suggest me can i take ELSS mutual fund and if it is yes and how much?
    Pls suggest me.
    Thanks

  60. Hi, Mr Hemant,
    I am a regular reader of the articles posted on tfl.
    I want to invest Rs 4000-5000 pm in ELSS through SIP.
    Can you please suggest some 2-3 ELSSs in which I can start my SIP investment for tax planning.

  61. Hi Hemant,
    Thanks for such a nice and useful piece of information.
    Please guide me on investment that should make:
    Currently my investments are:
    ICICI Pru Life Time super 1500/- P.M.
    Aviva 1700/- P.M.
    LIC 1600/- P.M. (By the name of my wife)

    My Net Monthly Income is 67000/- after TDS. CTC – 11 Lacs.
    I have 6 months old daughter as well. I am planning for some secured plan for her and some investment in pension plan and some growth-income related investment.
    Is there any option to invest in gold bonds.
    Please advice me.

    Thanks & keep up the good Work.

      • I went thru the link. I understood both thing has to be taken separately. But i am confused where to put money for investment and what kind of insurance would be right for me. Please help.

        • You can consider investing in equity mutual funds via SIP if the goal is long term. It is also advisable to have a PPF account as well due to its good returns and almost no risk feature.

          For insurance everyone should have term, medical and accidental insurance. Although it may sound too much to some people, it is actually not and premiums are very much affordable.

          • Thanks Vivek,
            I will be opening PPF account, Please explain more about SIP. I am looking for long term investment say for 15-20 yrs for the purpose of my daughter who is 6 mnths old now.

      • Thanks I went thru the link. I understood both thing has to be taken separately. But i am confused where to put money for investment and what kind of insurance would be right for me. Please help.

  62. Hello Hemant,

    Advise me whether the decision is right or wrong….

    i have close my SIP in brila sunlife Tax relief 96 (SIP have completed 45 months and the returns were very low compare to my investment) and have continue SIP in fidelity Tax advantage fund and have started new a SIP plan in Canara Robeco equity tax saver….

  63. Hi Hemant,

    Thanks for providing such a valuable information.

    I am working person(age -27) and need to invest 1 lac for my tax savings so the best possible options that i could think of are:
    1.Term Plan of LIC
    2.ELSS
    3.PPF
    Do you think i need to add in few more areas of investment?

  64. Dear Ashish,
    As u have written in your earlier post that Growth fund and Dividend fund are almost same.
    then why there is too much difference in NAV of ‘HDFC tax saver fund’?

    NAV of HDFC TAX SAVER
    1)Dividend fund 47.40
    2)Growth fund 208.60
    pl clarify my doubts.

    Regards

    Manish

    • Dear Manish,

      You are correct that that there is huge difference in NAV of Dividend fund and growth fund. But the question is : How is it affecting your profit?

      I don’t think if it makes any difference to any customer if he/she chooses dividend or growth option. The only difference is : you will get paid in term of dividend if you choose dividend payout option otherwise same will be re-invested in case of growth / dividend re-investment option(s).

      NAVs are just like the price (current market value) of direct equity shares.
      For an example, ICICI Bank Ltd share is priced at Rs. 928/- and HDFC Bank Ltd. share is priced at Rs. 584/-. Now it doesn’t mean that ICICI share is better than HDFC or HDFC is better than ICICI. Both are equivalent category share, both are equivalent level company from same industry having same level of standards and grow almost same. The profit or loss will be in percentage (%) not in rupees. If ICICI share price increases then HDFC share price will also be increasing at almost same level. Right?

      For detailed understanding on your question, you may refer the link below:
      https://www.tflguide.com/2011/05/mutual-fund-question.html
      This may help you to get few of your doubts cleared.

      Let me know if my input answers your query of any more information could be furnished.

      Regards,
      Ashish

  65. Pls suggest a good investment for medium term (6 months to 1/1.5 years)

    p.m. investment: 5000/-
    Should I go for Birla Sunlife RSP ?

    I also generally have idle funds for shorter term (20/25 days to 5-6 months). Can I go for Reliance Money Manager fund?

  66. Hi , That was a valuable piece of info..

    Can you just give a calculation of tax savings for someone in 10% income tax slab?(through ELSS)

  67. Hi Hemant,

    This article was very useful. I am very new to mutual funds. I want to invest Rs. 2000 pm in ELSS SIP. Can you please suggest which fund should I opt for?

    Please suggest.

    Thanks and regards,
    Abhishek

  68. One clarification, if I switch from a Growth plan of ELSS to Dividend plan of ELSS after lock-in period, will it be treated as a fresh investment for Tax saving purposes in the FY in which the switch has been made?

  69. Hi Hemant,

    An excellent, informative and helpful article. It was by chance that I stumbled upon this article and the website. And I am hooked. Reading the links you have included in your articles.

    I have a query. For year 2013, medium to high risk appetite, which top 3 ELSS funds would you recommend for investment?

    Amitabh

  70. Dear Hemant Sir,

    First of all, I want to say many time thanks for sharing your valuable knowledge with people like me, who dont know that what is investment.

    i am 25 years old, unmarried, working in psu, monthly income 28000/-.
    i can invest 70000 per year for 15 years. i have selected following fund. please give suggestion-
    1. Can Robeco Eqty TaxSaver (G)
    2. Franklin India Tax Shield (G)
    3.L&T Tax Advantage (G)

    Please give your suggestion about above fund.

    i have two question:-
    1. what is difference between sip & elss? do all fund give offer of investment through elss.
    2. what is fund & what is portfolio? please explain.

    Thanks sir,
    Prabhat

  71. Hi Hemanth

    I am a NRE and planning to wrap up in one year or so. I have NRE deposits with national banks which will be treated non-nre deposits once I go back India.
    I would like to ask you how can I use my deposit for monthly income by avoiding taxes as that is the only way of my income. You can also suggest to invest in other schemes which are safe and secure and give me monthly incomes.

  72. sir,
    I want invest in ELSS and i am new to MF. so please suggest me which one is suitable for me. salary is 24000 p.m married also.

  73. A very informative article indeed.
    I would like to know more about the lock in period. Pls explain in detail.
    And wht implications it has in long term investment like Birla SunLife Tax Relief.

  74. I want to invest Rs. 30000 Lumpsome on elss or ulip plz suggest me t plan. I have term plan of. 80 lakh sumassured. I want best returns in 15 years

  75. I have certificate of 100 magnums worth Rs 10 each (total Rs 1000). NAV is 11.66. Scheme term was 1991-1997. How do I calculate maturity value.

  76. Hemant Beniwal has explained how mutual fund can help you to save taxes very well. It is well known that how taxes tend to drain your hard earned income. ELSS fund can be effectively used as tax saving instrument. The short period of investment in ELSS can be beneficial for short term investors.

  77. Great article, Hemant! But it’s a little outdated with figures only upto 2010 and it still reflecting 80C limit as 1L. Article may need some updation on the best ELSS funds as well. Not sure if HDFC is still on top given the trent in the last 10 years – 2006 to 2016.

  78. Hi Sir,

    I have invested initially Rs 40000 in Birla Sun Life Tax Relief 96 on jan 4 2014 and second invest Rs 30000 0n jan 6 2015.But this march 2017 end 3 years locking period is over.What should be the return amount and when can i get my total returns amount.
    Please explained me on this.

    Regards
    Gopal

  79. Hi,

    Can I go with ICICI prudential one for ELSS. I have below queries on that:-
    1 ) I have existing account in ICICI bank ,is this enough for opening ELSS.
    2) I want to open it for 150000 rs . Please suggest the time duration i can go for?
    3) Please suggest me that is this really beneficial.

  80. My Father invested in HDFC ELSS scheme in 2011 and it matured in 2016. Now while filing for tax the person in charge is saying that the amount received is subject tax. As per my understanding ELSS stands in long terms gains and amount earned in the 5 years period should be tax free. However if the maturity amount contains any bonus or so. Would that be taxable ? Has there been any change in the budget 2016-17 Financial year.

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