When it comes to tax saving, an investor must bear in mind that not all S.IPs are tax-free. Under the tax-free hoarding, you can opt for Equity-linked savings schemes, Public Provident Fund, Employee’s Provident Fund and Unit Linked Insurance Plans.
Out of these, ELSS is a scheme that offers tax benefits under Section 80C of the Indian Income Tax Act, 1961. Investors can claim tax exemptions on the principal amount of up to Rs. 1.5 Lakhs. To add to this, the returns earned on these funds is also exempted from taxes under Section 10.
Although these plans have limited tax benefits, they can help you build a huge corpus in the long term!
Keep in mind that the sooner you begin investing in small amounts, the higher will be your corpus in the long term. The returns expected differ based on the kind of scheme you opt for. So, stay vigilant of the investment objectives when you are looking to invest in mutual funds through an SIP.
Is Demat account required for SIP?
0 people liked this article.