Equity Linked Saving Scheme (ELSS) is one of the latest investment products on the market. ELSS work by linking your deposit with that of other investors, and then giving you a share of any profits made. There are a variety of ELSSs on offer, so it’s important to do your research if you’re considering investing in one.

What is Equity Linked Saving Scheme (ELSS)?

An Equity Linked Savings Scheme (ELSS) is a product that allows you to save for your future by linking your investments to the stock or mutual fund markets. ELSS are offered by banks, finance companies, and other financial institutions. You can invest in these schemes through a variety of funds. These include bank deposit accounts, cheque and savings account products, equity funds, and debt funds.

The key benefit of an ELSS is that it allows you to access your investment returns easily. As your shares or units in a fund rise in value, you will earn capital gains on those holdings. Similarly, if the value of a fund falls below its initial purchase price, you will suffer a loss on your investment. This makes ELSS a very flexible way to save for retirement.

Many schemes offer low-cost investments that offer good returns on your money. Additionally, many schemes have insurance policies that protect your investment if there is a market crash.

Who Should Invest in ELSS Mutual Funds?

If you are looking to take the plunge and invest in Equity Linked Savings Schemes, here are a few things to keep in mind.

1) ELSS products offer high returns over time, owing to their investment pool of companies that are typically undervalued.
2) In order to get the best possible return on your investment, it is important to make sure that the fund you choose has good liquidity. This means that the fund can be easily sold in the market so that you can receive the highest possible return.
3) It is also important to choose a fund with a low cost of administration. This means that the fund management company will have fewer costs associated with running the fund. This will be able to give you a better return on your investment.

How do I invest in Equity Linked Saving Schemes?

If you’re looking to invest in an Equity Linked Saving Scheme, there are a few things to keep in mind. First, make sure the scheme is registered with the Financial Conduct Authority (FCA). Additionally, look for a scheme that offers good rates of interest and that has a long-term investment horizon. Finally, be sure to research the scheme thoroughly before investing.

What are the tax implications of Equity Linked Saving Schemes?

An ELSS allows an investor to receive regular dividend payments from a scheme’s underlying investments. This can be used to reduce or eliminate taxable income in the year of distribution. However, there are important tax implications to consider when investing in an ELSS.

First and foremost, you are essentially investing in the underlying assets of the scheme. As such, taxation will be on the realized capital gains and losses associated with these investments. This means that if the value of your investment falls below your initial contribution, you will have a loss on your original investment. Conversely, if the value of your investment rises above your contribution, you will have a gain on your original investment.

Additionally, any dividend payments made from an ELSS will be subject to income tax at your marginal rate. This is the rate at which you earn income over and above your basic exemption. This means that if you are in the 25% tax bracket, for example, dividends paid from an ELSS would be taxable at 25%.