Query on Tax Saving ELSS Mutual Funds/FD
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Hi Dimers,
I want to invest in ELSS Mutual funds for tax saving under 80C, can some one throw some light on Where and how to invest and what are the best/stable ELSS Mutual funds to opt for.
I found option in phonepe App to purchase through app. can i purchase through app or through any other website?
Also if i invest this month Jan 2020 amount of 90k as yearly amount then can i declare entire amount 90k for this fiscal year Apr-2019 to Mar 2020 during IT return or only amount for (Jan,Mar,Feb) which is around 30k for above period?Thanks.
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@panchabhut bhai share your guidance. 🙂
Note →
1. ELSS mutual funds have a lock-in period of 3 years for each investment (recurring ones too)
2. ELSS mutual funds tend to go up during feb-march as most people are looking for tax saving investment (demand is up value go up )
3. See the companies in the mutual fund and the fund manager (Don’t trust anyone with your money, even not me0
4. Go for direct funds via Paytm Money, Groww, ET Money (It has higher return by 1%)
5. If some advisor is investing on your behalf/ creating an account for you, most probably your investment in regular investment
6. Mutual funds are for long term investments, it does not matter with short time falls.
7. I haven’t invested yet in mutual funds but will invest in 2020
The investments under 80C is considered on annual basis and not on pro-rata basis. However, to ensure that the amount gets duly credited tot he final form of investment, it is essential that the payments are completed before Feb end.
Before going for ELSS, evaluate the risks and also decide what you really require as well as the amount you require to invest.
Remember that the limit of 80C is 1.50 Lakhs, applicable across all products including EPF and life insurance. An additional 0.50 L is applicable only exclusively for NPS.
Since you intend to go for ELSS, obviously you are a tax payer also possibly a salaried employee.
For a salaried employee, the first thing to do is to take a Term Insurance policy of adequate value. The earlier you take, the lower will be the premium.
Also, remember that every year, your salary will increase and with that the EPF contribution will also increase. Since the total limit of 80C normally remain same for a number of years, it would mean that the balance amount after EPF and insurance, on which benefit can be availed under 80C will continuously come down. So if you want to go for ELSS, do not go for any thing that requires a minimum monthly/annual commitment. Only opt for one that has the flexibility of investing different amounts in different years.
As you go up the ladder, your income and tax liability will increase and 1.50 Lakhs may not be enough. In most cases, as salary will be increasing, you will not really need the invested money for a long time and in such a case ELSS may end up to be a burden as the lump sum received on maturity will have to be reinvested properly. Considering these two factors, NPS with active choice may be a better option than ELSS, giving you the additional benefit of going upto 2.00 L instead of 1.50 L. Do remember that all mutual funds have administrative charges and NPS has the lowest Admin charges whereas ELSS charges are relatively higher.
Since you have opted for ELSS, I am assuming that you are willing tot take risks, so not considering PPF.
@riser I would suggest to only go for direct plans through the website of various fund houses. Investing in direct plans through their websites is always better. You can register on the websites of the fund houses without much issues.
Also from next year on if your are willing to take the risk involved with stock market go the SIP way and start investing from the month of april in the ELSS funds you choose.
- Do your research through any of the apps to find the right fund but I would suggest to invest directly through CAMS or KARVY (depending on the MF you choose) as these are the registrars. Avoid any MF app as you never know when they will shut down and then you have get in touch with your MF to get credentials to manage fund directly. Both CAMS and KARVY have a good simple interface to manage your investments and offer DIRECT plans.
- If investing in ELSS, be ready to give time of altleast 7 yrs to get a healthy return. Lock in is 3 years but stay invested.
- If you need to check ratings, returns of mutual funds use Value Research.
If one invests through CAMS or KARVY it would be regular plan right ? Regular plans have the commission fee added to it so isn’t it always better to go for direct plans through the MF house?
@panchabhut thanks for detail information, i got some info and i’m totally a newbie to this.
My temporarily purpose for current year 2019-2020 is save tax on my salary for 80c, i was thinking of either ELSS (One time and take risk) / 5 year FD of around 1L.
currently under my 80c declarations i have 50k( pf+life insurance) so for remaining 1L in order to save some tax i want invest 1 time in either ELSS funds(One time investment for this year only)/FD of 1L .
I will opt for NPS and term insurance plans to save more tax for 2020-2021 year as i will be falling under increased tax bucket for 2020-21 year.
so can you suggest based on my above requirements.
if ELSS can you share some info where to buy i do have hdfc/icici bank accounts can i directly invest from them or through zerodha/paytm/etmoney?
Thanks
I would still suggest that you go for term plan this year itself as your annual premium will increase with every year you delay, plus your risk cover will also be delayed.
again, if you plan to go for NPS next year then opt for it right now as the commission and admin charges of NPS is lowest among all mutual funds and in the long run, the cumulative effect can be significant. NPS investments are considered both for normal as well as special limits so you can invest only as much as will be required for tax saving purpose.
ELSS is not really beneficial unless held for at least 8-10 years. Always invest directly with the fund houses and not through any intermediary. CAMS/KARVY are registrars/depository but if you invest through them, then they also function as brokers only.
No charges. Please use either CAMS/KARVY depending on the fund house you want to invest with or even direct mutual fund websites if you want to. Always ensure the plan you choose has Direct in it’s name.
Any ELSS scheme will do for showing as tax saving investment. It forms a part of 80C limit of 1.5L along with EPF, PPF, Tax FD etc.
Check here for list of ELSS funds and also see more info – https://www.valueresearchonline.com/funds/sav...x/
@riser Do not go for famous platforms like Paytm/Phonepe. Kuvera and Goalwise these platforms offer direct plans( less commission than regular plans, so more returns ). Kuvera and Goalwise offer more features like tax saving, exit-free redeeming, suggest good fund recommendations based on analysis and all. I prefer and recommend Goalwise, because these features are entirely free, whereas in Kuvera they charge for these features, but both platforms offer direct plans. Check out reddit/r/indianinvestments subreddit there users are much more active and more informed. You can PM for referral for these platforms. And check out freefincal blog it is one-stop solution for mutual funds and personal finance.
Everyone is advising for direct plan forgetting that everyone is not master in it. For someone newbi who has no knowledge of mf, going for regular plan (who understands his risk appetite & advise him periodically) might be better than direct plan.
For stalwarts ofcourse direct plan is better…
Do you think you can easily find “someone” who would act in your interest? Unless you can find a good financial advisor (whom you can talk face to face) for a fee none of the other agents would work for your goals/interests. Also many of these platforms which offer MF products don’t do anything other than providing the convenience to buy and monitor mutual funds from different fund houses in a single platform. If one needs this single platform convenience they can do on CAMS/Karvy as was suggested above.
Also how long would one want to be a ‘newbie’? At some point they have to learn to manage their own finances. In India it is tough to rely on any advisory services due to the lack of regulations and enforcing them.
This is very informative.
I have a few queries wrt taxes, and insurance.
My LIC agent fooled me into taking a endowment policy which has a premium of 1.5lakhs.
I have already paid it for this year as i wasnt fully aware of term insurance.
Is there anyway I can get my money back and terminate this policy and move to term insurance?
Wrt. Tax saving. What’s the best way to save taxes when your annual base is 9lakhs
Any form of life insurance other than term insurance only benefits the insurance company and the agent, but definitely not the subscriber. make sure you do not deal with that agent again.
All insurance policies has a look-in period during which you can get full refund. but if that is over, you can only get surrender value which will be less than what you have paid. still, in the long run, that loss would be compensated if you take a term policy and then invest the remaining amount in proper pure investment products.
tax planning depends upon individual situations and can not be generalized. however, as thumb rule, first consider the mandatory EPF contributions and life insurance. after than consider other investment products, depending upon your ability to take risk. you can consider ppf, elss or nps. if you are married and have a girl child, consider sukanya samriddhi instead of ppf. remember that for other than nps, the limit on which tax benefit is calculated is 1.5 L whereas nps can come both within that 1.5 L and also has a special additional limit of 50k.
if your employer does not provide medical or if you have senior citizens to take care of, go for Mediclaim policies for which separate tax benefits are available.
Reech people’s post
@sj260498685 — read 4-5 times
https://economictimes.indiatimes.com/wealth/tax...
Thanks so much for your help bro
I would thank all dimers who commented and shared information on elss Mutual funds.
Finally I had decided to invest total amount on multiple funds (2-3) Mirae Asset tax saver fund direct,Axis Long term equity direct plan growth, DSP tax saving fund direct plan growth instead of single mutual fund.
Imp: decided to buy directly through mutual fund house website to avoid any commission and other charges.
My next step is do e-KYC for mutual fund as I had not done KYC for mf or demat account.
But seems eKYC has limit of 50k per annum and per mutual fund investment. As I am planning to invest in multiple I think I will not be crossing the limit. Please correct me if i’m Wrong.
for KYC, locate your nearest CAMS or Karvy office and do in-person KYC once and then link it with the MFs
U can invest until 31st march 2020, even if you put entire amount on last day, it is valid for whole finanacial year
I suggest wait for a month i feel markets will fall
You can register on zerodha till then n keep for investment
Invest in axis long term elss or adiya birla tax relief