What are ‘EQUITY LINKED SAVINGS SCHEME’ funds??
An ELSS is an Equity Linked Savings Scheme, that allows an individual or HUF a deduction from total income of up to Rs. 1.5 lacs under Sec 80C of Income Tax Act 1961. ELSS stands out as a smart and efficient way of saving tax and creating wealth These funds have a lock-in period of 3 years (lowest of any tax-saving option).
Different tax saving(80C) options?
There are following the popular tax-saving investments that you can use under the 80C section:
- PPF
- Provident fund
- Life insurance premiums
- Child’s tuition fees
- Equity-linked savings schemes (ELSS)
- Home loan principal
- ULIPs
- National Savings Certificate (NSC)
- National Pension Schemes(NPS)
- KisanVikasPatra
Lock-in period ?
ELSS- 3yrs It is the lowest amongst all tax-saving investments.
ULIP -5 yrs, FD 5yrs, PPF 15 yrs, NSC 5yrs
How does Lock-in work in SIP?
In a SIP, every transaction has a 3yr lock-in. Example: SIP of Rs.10000 monthly.
Transaction made in Jan 2018 can be withdrawn after Jan 2021.
What are various tax slabs?
| Income Slab | Tax Rate |
|---|---|
| Income up to Rs 2,50,000 | No Tax |
| Income between Rs 2,50,000 – Rs 5,00,000 | 5% |
| Income between Rs 5,00,000 – Rs 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
| Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore. |
|
| Cess: 3% on total of income tax + surcharge. | |
| *Income tax exemption limit for FY 2017-18 is up to Rs. 2,50,000 for individual & HUF other than those covered in Part(II) or (III) | |
| Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old) (Both Men & Women) | |