Why ELSS Tax Saving Mutual Funds is best choice for tax planning

Why ELSS Tax Saving Mutual Funds is best choice for tax planning

Investors can save up to Rs 46,350 in taxes per year by investing up to Rs 1.5 Lakhs in eligible schemes under Section 80C of the Income Tax Act 1961. There are broadly two types of tax savings schemes – risk free or low risk schemes and market linked schemes. The risk free or low risk schemes are Public Provident Fund (PPF), National Savings Certificates (NSC), 5 year tax saving Fixed Deposits (offered by banks and post office), traditional life insurance plans (e.g. endowment plans, money back plans etc), Senior Citizens Savings Schemes etc. In these schemes capital safety is assured. In some schemes like NSC, FDs returns (interest) are guaranteed, while in others the interest rates can change from time to time over the investment tenure.

The market linked schemes under Section 80C are ELSS Tax Savings Mutual Fund Schemes or Equity Linked Savings Schemes (ELSS) and Unit Linked Insurance Plans offered by life insurance companies. ELSS and ULIPs invest in capital market securities and therefore, they are subject to market risks. If you want assurance of capital safety then market linked schemes are not for you and you should invest in Government small savings schemes (PPF, NSC etc) or Bank tax saving FDs.

However, if you are willing to take risks and are prepared to remain invested even beyond the lock-in period of these schemes then ELSS is the best tax saving investment choice. ELSS enjoys three big advantages compared to other tax saving investments.

Potential of giving superior returns

Favourable tax treatment

Superior liquidity
In this blog post we will discuss these advantages of ELSS vis a vis other 80C schemes.

Superior Returns
Historical data shows that, equity is best performing asset class in the long term. In the last 20 years, the S&P BSE – Sensex gave 11.7% compounded annual returns, while bank FDs gave average annualized returns of only 7% over the entire period. Many investors focus simply on tax savings and ignore the growth potential or the tax implications on the maturity amount. The result is that, they get sub-optimal returns which struggle to beat inflation on a post tax basis. ELSS tax saving mutual fund Schemes, on the other hand, offer both 80C tax savings and wealth creation potential over a sufficiently long investment horizon. The table below shows the post tax inflation adjusted rate of different 80C investment schemes over the last 5 years.

Key Assumptions: The investor is the in highest (30%) tax bracket. Average category returns over the last 5 years have been assumed for ELSS. Please note top performing ELSS schemes gave higher returns. Life insurance endowment plans returns assumption is based on prevailing IRRs of life insurance endowment plans.
You can see in the table above that, ELSS has outperformed all other 80C schemes. Notice the last column post tax returns. You can see how some returns can seem attractive on a pre-tax basis, but low on a post tax basis. We will discuss the taxation aspect in more details later in this post. Let us now discuss another important aspect that is often ignored by investors, when looking at returns and when making investment decisions.

You will see many people complaining about rising prices, but how many people factor in inflation when making investment decisions? In the chart above, we saw post tax returns of several Section 80C investment schemes over the last 5 years. Let us now bring inflation into the picture. The chart below shows the CPI inflation rate from 2013 to 2017.

The base colour of the new Rs.  10 notes is ChocolateBrown. Also read other features

The base colour of the new Rs.  10 notes is ChocolateBrown. Also read other features

The Reserve Bank of India (RBI) will shortly issue new banknotes of Rs. 10 denomination, the central bank said on Friday. The new Rs. 10 notes will be in the Mahatma Gandhi (New) Series, The new denomination notes will have motif of the Sun Temple and the Konark on the reverse side, depicting the country’s cultural heritage.

Here are 10 things to know about RBI’s new Rs.10 currency notes:

1. The dimension of the new Rs. 10 banknotes will be 63 mm x 123 mm.

2. The new Rs. 10 notes will have a see through register on the front sides with denominational numeral 10.

3. The denominational numeral 10 will be printed on the front of the note in the Devnagari script.

4. The front sides will bear a portrait of Mahatma Gandhi at the centre. Micro letters ‘RBI’, ‘Bharat’ (in Devnagari), ‘India’ and ’10’ will also be printed on the front side of Rs. 10 notes.

5. The front sides will bear a windowed demetalised security thread with inscriptions ‘Bharat’ and ‘RBI’. Guarantee Clause, Governor’s signature with Promise Clause and the RBI emblem will be printed towards the right of Mahatma Gandhi’s portrait, said the RBI.

6. The Ashoka Pillar emblem will be on the right side of the front side. The front side will also have electrotype (10) watermarks, besides Mahatma Gandhi’s portrait.

7. The front sides will have a number panel with numerals growing from small to big on the top left side and bottom right side of the Rs. 10 note.

8. The year of printing of the notes will be inscribed on the back sides of the Rs. 10 notes, towards the left.

9. The back sides will also have a Swachh Bharat logo with slogan.

10. The reverse sides of the new Rs. 10 notes will have a language panel, motif of the Sun Temple and the Konark, and the denominational numeral 10 written in Devnagari script.

Want Co-Producers / Partners/ Investors for a Hindi language Film by a leading production house.

Want Co-Producers / Partners/ Investors for a Hindi language Film by a leading production house.

The producers of the film is an established production house which has produced more than 10 films in Hindi, Tamil and Malayalam languages.

The Director and star cast is quite well-known so as to avoid any major risk, though the sucess formula will be the story line of the film.

The estimated budget of the film is about Rs.12 crores, exclusive of Advertising and Publicity, which is expected to be borne by the Distribution channel. Any intetested party with a minimum investment of Rs.2 Crores is welcome to contact us.

Please share your details on WhatsApp on 98200-88394 or email to Sudheendra@sudheendra.co.in.

http://www.shringarworld.com is our online platform for people in Film and Entertainment Industry. We try to connect all participants of the industry like Producers, Financiers, Investors, Directors, Actors, Actresses, Models, Singers, Dancers etc

Want to know about BITCOIN

Want to know about


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Outsource all your Accounting, Taxation (Income Tax as well as GST), Legal and Statutory Compliances to us….

Outsource all your Accounting, Taxation (Income Tax as well as GST), Legal and Statutory Compliances to us….

We also undertake BB&Book-Keeping, Accounting, Taxation and all Statutory Compliances at one place in any major city in India.

Please call / whatsapp on 98200-88394 for further discussion as it is difficult to track replies in the group.

Income Tax and all related matters such as PAN Card, Tax Returns, TDS Computation and Returns, Income Tax Scrutiny and Assessment etc

GST Consulting including GST Registration, Tax Computation, Filing Tax Returns, Attending any Enquiries , Scrutiny etc

Companies Act and ROC Compliances are also undertaken by our team.


Some very important financial tips that everyone should know

Some very important financial tips that everyone should know ….

1. Avoid buying property on loans as it eats most of your earnings unless you have a clear plan for its repayment. It’s important to monitor cash flow. Though, the house will be your asset, your liability will be much more.

2. Start a SIP at a very young age. Try to save atleast 15–25 % of your earnings.

3. Avoid buying a car unless you use it everyday.
4. Do not let this sentence scare you. “Mutual fund investment are subject to market risk. Please read the offer documents carefully before investing”. Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

5. Try having a simple wedding.

6. Atleast 20% of your wealth should be liquid so you can utilize it when necessary.

7. Considering inflation, you are actually losing money if it is in savings bank account. Do not keep huge money in savings bank account.

8. If you invest in stocks, pay due attention.

9. If you invest in stocks have a separate account for delivery investment and Intraday investment. It is easy to monitor this way and also makes tax calculation easy

10. Do not have a belief that property and car make you rich. Its what you save and invest, that is important.

11. Never invest in insurance for returns. Insurance is not an investment option. It is a risk management tool.

12. Never use credit cards for lavish spending. Use credit cards intelligently and for needs not for wants.

13. Cancel all credit cards before you die. Or inform family about all your accounts, credit cards, loans and saving now itself. Even a small residue will cost your family much.

14. Invest on yourself and then on other investments.

15. Always try to balance your earnings with your savings first, then on spending and loans. Never take unnecessary loans. Always have reserve and utilise them and unless no other go never take loan.

16. Always have a plan for future events on your career, life, spending and finance.

17. Always have a reserve on your savings for contingency and urgent situations.

18. Your personal life and health are the most important investment. Do have a regular health check and do healthy workout every day. Stay healthy and live happily.

One-Stop-Consulting to Manage your Accounting and Taxation (Income Tax & GST) , Companies Act & R.O.C compliance and all other Legal and Statutory Compliances. We are a team of Chartered Accountants Company Secretary and Lawyers. We also undertake Managing your Accounting and Compliance work in your office.

Intellex is a ONE-STOP Consulting firm with offices/associates all over India, for:-


One-Stop-Consulting to Manage your Accounting and Taxation (Income Tax & GST) , Companies Act & R.O.C compliance and all other Legal and Statutory Compliances. We are a team of Chartered Accountants Company Secretary and Lawyers. We also undertake Managing your Accounting and Compliance work in your office.

Syndicationof Finance (both Debt and Equity,) , subject to strict due diligence

Accounting on assignment/outsourced basis,

Taxation (Both Income Tax and GST) and

Company/LLP Registration and ROC and Companies Act compliance,

Overseas Company Incorporation, Strategic Consulting etc.

The promoters of our organizations come from diverse background such as from IIT & IIM as well as Chartered Accountants, Lawyers. We are based in Mumbai (India) and having offices across most of the cities in India.

Kindly look at our LinkedIn profile. https://www.linkedin.com/in/intellex2002

For more information and assistance, you may either send us E-Mail to sudheendra@sudheendra.co.in or or talk to us at Mobile No. 98200 88394 (Mumbai, India)