Blog : Things To Understand Before Putting Money In Equity Linked Savings Scheme

All working people are obliged to pay taxes to the government of their country. There is no fixed tax amount that one has to pay. The tax depends on one s annual income. The government takes a certain part of one s income as the tax every year. But there are some investment plans that can help us to restore the most amount of our hard-earned money.

Under section 80C of the Income Tax Act, one can invest up to 1 lakh to various investment plans and the same amount of money will be deducted from the tax calculation. So this saves a huge amount of one s earned money. Section 80C gives one a variety of investment plans that include Provident Fund (PF), Mutual Fund, Equity Linked Saving Schemes (ELSS), Senior Citizen Saving Schemes, etc. ELSS is one of the most undertaken investment plans by people.

There are few things people need to know about ELSS such as Equity Linked Savings Plan has a lock of three years which means, people cannot withdraw any amount of cash before three years. This 3-year s lock helps people to save a large amount of money. It is very important for equity investments. The amount of money one gets after the maturity is also not included in tax calculation.

Even in cases of emergency, one can not withdraw any money from this saving. Even with the penalty, no money can be taken out. This factor might prove to be a disadvantage for some people. But this investment has dividend options. Because this is a long term plan so the investors do not get any daily or monthly return and the minimum amount of investment is 500 INR with a maximum value of 1.5 lakh.

Equity Linked investments are risky as well. They are dependent on the stock market. Now, we all know the stock market fluctuates. When we invest the money the market condition may be good, but at the time of our withdrawal, if the market falls down then we are less likely to get a good return. But the Indian stock market is quite stable and chances of losses in Equity Investments are very low.

Equity Linked Savings provides one of the maximum tax benefits of mutual funds. They return a huge amount of money in the shortest time. After the 3 years lock period is over, one can withdraw their money or can keep it until they reach their economical goals. But it is always advised that people should invest their money in different plans only after thorough research and planning.