5 Things to Understand Before Putting Money in ELSS

All working people are obliged to pay taxes to the government of their country. There is no fixed tax amount that one has to pay. The tax depends on one’s annual income. The government takes a certain part of one’s income as the tax every year. But some investment plans can help us to restore the most amount of our hard-earned money. Under section 80C of the Income Tax Act, one can invest up to 1 lakh to various investment plans, and the same amount of money will be deducted from the tax calculation. So, this helps one to save a huge amount of one’s earned money. Section 80C gives a variety of investment plans including Provident Fund (PF), Mutual Fund, Equity Linked Saving Schemes (ELSS), Senior Citizen Saving Schemes, etc. ELSS is one of the most undertaken investment plans by people.

There are few things people need to know about ELSS, like,

1. Equity Linked Savings Plan has a lock of three years, so people cannot withdraw any amount of cash before three years.
2. This 3-year’s lock helps people to save a large amount of money. It is essential for equity investments. The amount of money one gets after the maturity is also not included in tax calculation.
3. Even in cases of emergency, one can not withdraw any money from this saving. Even with the penalty, no money can be taken. But this investment has dividend options.
4. Equity Linked investments are risky, as well. They are dependent on the stock market. Now, we all know the stock market fluctuates. When we invest the money, the market condition may be good, but at the time of our withdrawal, if the market falls down, then we are less likely to get a good return. But the Indian stock market is quite stable, and chances of losses in Equity Investments are very low.
5. Because this is a long term plan, so the investors do not get any daily or monthly return and the minimum amount of investment is 500 INR with a maximum value of 1.5 lakh.

Equity Linked Savings plans provide one of the maximum tax benefits of mutual funds. They return a huge amount of money in the shortest time. After the 3 years lock period is over, one can withdraw their money or can keep it until they reach their economic goals. But one thing all investors should keep in mind is that, just because it saves the tax money, one should never invest in any scheme. They have to understand if the scheme is actually needed or not and how it can help them in the future. Only after thorough research and planning, people should invest their money in different plans.