Income Tax: If you come under income tax and want to save tax, then invest in ELSS mutual funds from March 31, 2024. You will save huge tax.
Income Tax: About one month is left for the end of the financial year 2023-24. 31st March 2024 is the last day. Taxpayers are rushing to invest in tax free financial instruments to claim tax deductions. For them, apart from Term Insurance, NSC, PPF and NPS, there is also ELSS Mutual Fund in which they can save tax by investing. Equity Linked Savings Scheme (ELSS) mutual funds come with a lock-in period of three years and give investors equity exposure while also giving tax benefits. Under Section 80C of the Income Tax Act, investors are entitled to claim income tax exemption of up to Rs 1,50,000 on investments made in ELSS funds. This not only helps in saving income tax but also facilitates growth in wealth.
If you are planning to invest in Equity Linked Savings Schemes (ELSS) after redeeming your existing equity investments, make sure you know these key points:-
- If you sell your equity investments before March 31, 2024, which you have purchased in this financial year, the capital gains will be taxed as per Short Term Capital Gains (STCG) tax.
- If your current equity investments are more than a year old and you redeem them before March 31 this year, the gains will be taxed as per the provisions of Long Term Capital Gains (LTCG) tax i.e. at the rate of 10 percent. If you wish to claim indexation, the applicable tax rate will be 20 percent.
- Long Term Capital Gains (LTCG) is applicable only if the profit from investment in equity exceeds Rs 1 lakh in a financial year.
- If you want to avail the tax cut for the current financial year, you must invest in one of the ELSS schemes before March 31, 2024.
- If you have invested in ELSS schemes more than three years ago, you can redeem them before the end of the financial year and reinvest the income received to claim tax benefits for the current financial year.
