Tax Planning

It is generally observed that people tend to invest hastily in PPF or ELLS at the end of the financial year just to avail tax benefits. The purpose of tax planning is to ensure tax efficiency without compromising on safety of your investments and returns thereon. Good planning will maximize the available tax benefits from your investment portfolio.

How does tax saving work?

Direct Saving - To a Maximum if 1,500,000

  • Public Provident Fund
  • Savings certificates
  • Equity Linked Saving Scheme
  • Principal repayment of Home Loans
  • Pension Fund
  • Tutuion Fees
  • Employee Provident funds
  • Life insurance: Health insurance:

Indirect Saving

  • Small interest
  • HRA
  • Treatment for certain diseases

Assured return options

These include bank deposits, PPF, NSC etc. The biggest appeal for these products is their simplicity, familiarity, assured returns and government guarantee. But all of this is at the cost of very low returns.

Why ELSS tax saving mutual funds?

Products
ELSS
Bank FD
PPF
NCS
Insurance
policy
Returns
~ 16% - 17%
7.5% - 8%
8.1%
8.1%
5% - 7%
Lock in
3yrs
5yrs
15yrs
5yrs
10yrs

ELSS funds give superior returns compared to other tax saving options

ELSS funds have the shortest lock in period of 3 years

ELSS funds give returns that are completely tax free

An Analysis of the long term benefits of investments via ELSS vs PPF is evident from the graph below.

It is common practice for an individual to invest in PPF to avail tax benefit u/s 80C. Investments made in ELSS are eligible for such deduction as well. ELSS offers the same tax benefits as PPF without the minimum lock-in period requirement. Over the past 2 decades, ELSS has given an average annual return of 16-18 % as opposed to PPF's 6%.

In a nutshell, better flexibility and liquidity along with higher returns on equity makes ELSS a better option to invest for tax savings than PPF.

about us

Wealthclock makes investing simple, safe and convenient. We offer mutual fund investment and financial markets advisory over the friendly and interactive online platform that makes investing fun for all first-time investors. With the help of advance tools, detailed market analysis and team of expert advisors, Wealthclock ensures that the users are on top of their game. Come and watch your investment grow.

contact details

Wealthclock Advisors, Manish
Mahal, Off Veera Desai Road,
Jeevan Nagar, Andheri West,
Mumbai - 400053 Maharashtra

ASSOCIATION OF MUTUAL FUNDS OF INDIA
REGISTERED MUTUAL FUND DISTRIBUTOR
ARN:115995

BSE REGISTERED MUTUAL FUND
DISTRIBUTOR MUTUAL FUND
CODE NO:11946