Income Tax saving idea : ELSS Mutual funds & ULIPS

Under Income tax Act section 80(C), you can reduce your taxable income by Rs 1,00,000. Investments in ELSS mutual funds & ULIP plans come under section 80(C). 

ELSS mutual funds: ELSS stands for Equity linked saving schemes. These are equity oriented mutual funds. 3 years lock-in period is applicable for all ELSS schemes. That means, once you invest in these schemes, you should not redeem your units till the end of lock-in period. But you can receive the dividends on your invested amount which are taxable.A few of the best ELSS mutual funds are SBI magnum tax gain, HDFC long term advantage, HDFC tax saver etc. These funds have delivered a good results in the past. As equity markets are subjected to risk, We advice readers to analyse thoroughly before investing in any equity linked funds.

ULIP: ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments. But many experts argue that ULIP plans are costly (High premium) compared to returns on separate investments in ELSS mutual funds and Life Insurance.

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February 1, 2009 | Filed Under Income Tax 

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