What is ELSS?
ELSS (Equity-linked Savings Scheme) is a special kind of mutual fund that helps you to save taxes under sec 80C of income tax. In this scheme, the funds are invested in equity, and because of which the investor has the potential to earn high returns compared to Fixed Deposit and Public Provident Fund. And returns on these are tax-free. However, the returns are only taxable if the earnings are above 1 lakh.
How much tax can I save?
It depends on the tax bracket an individual belongs to:
- If you are in the 5% tax bracket, you can save up to Rs 15,000 per year in taxes.
- If you belong to the 20% tax bracket, then you can save up to Rs 30,000 per year in taxes.
- If you are in the highest tax bracket of 30%, you could save up to Rs 45,000 per year in tax.