How To Save Tax With Investing In Equity Mutual Funds?
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Investing in equity mutual funds offers dual advantages: potential wealth accumulation and tax savings. Equity mutual funds, primarily invested in stocks, often serve as a favorable option for long-term financial goals. Let’s delve into how equity mutual funds can help save tax, particularly under the purview of Section 80C and other relevant sections of the Indian Income Tax Act. Primarily, one of the most popular tax-saving instruments within equity mutual funds is the Equity-Linked Savings Scheme (ELSS). Under Section 80C of the Indian Income Tax Act, investments up to ₹1.5 lakh in ELSS can be deducted from the investor's taxable income each fiscal year. If you're in the 30% tax bracket, investing ₹1.5 lakh in ELSS could save you up to ₹46,800 in taxes, which is a significant saving (₹1,50,000 * 30% = ₹45,000, excluding cess). Primarily, ELSS funds come with a lock-in period of three years, the shortest among all 80C tax-saving options like Public Provident Fund (PPF) and ...