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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) and hence the investors can not withdraw their money before the 3 year period

Different tax saving(80C) options?

There arefollowing 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
  • Home loan principal: ULIPs, National Savings Certificate (NSC), National Pension Schemes(NPS), and the KisanVikasPatra (with a lock period of 5 years).

If you are a free-lancer or independent tax-payer, the last day for making an ELSS investment is 31st March. If you are making an investment, please ensure that the fund allotment happens before 31st March. Hence, you should make your investments before 30th March before 2pm.
for you is also 31st March, however, you would have to claim a reimbursement from IT department as your proofs would not show the full amount.

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Transaction made in Jan 2018 can be withdrawn after Jan 2021.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 2%
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)
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