Tax savings in India involve utilizing various provisions under the Income Tax Act to reduce taxable income while staying compliant with legal norms. Individuals can claim deductions under Section 80C, which includes investments in options like the Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity Linked Savings Schemes (ELSS), and National Savings Certificate (NSC).
Contributions to the National Pension Scheme (NPS) and health insurance premiums under Section 80D also offer significant benefits. Additionally, deductions on housing loan interest, education loans, and donations to charities promote financial planning. Tax-saving measures in India not only help reduce individual tax liability but also encourage savings, investments, and economic growth through disciplined financial practices.
ELSS Fund which gave 36% Return
The Motilal Oswal ELSS Tax Saver Fund stands out with an impressive 36.01% CAGR over 3 years,
making it a top choice for tax-saving and wealth creation under Section 80C. With a robust fund size of ₹4,074 crore, it is managed by seasoned professionals Rakesh Shetty, Ajay Khandelwal, Santosh Singh, and Atul Mehra.
The fund’s superior returns are attributed to its focused investment strategy, emphasizing quality stocks with growth potential. By leveraging Motilal Oswal’s expertise in equity research and long-term value creation, the fund has consistently delivered outstanding performance, balancing tax efficiency and high returns for investors.
How Can One Save Taxes by investing in ELSS (Equity Linked Savings Schemes)
1. Invest Under Section 80C
Invest up to ₹1.5 lahks annually in ELSS to avail of a deduction under Section 80C, reducing your taxable income.
2. Start SIPs
Systematic Investment Plans (SIPs) in ELSS help spread investments over time, reducing the financial burden while ensuring tax-saving benefits for every installment invested during the financial year.
3. Leverage the Lock-In Period
ELSS has the shortest lock-in period among tax-saving instruments (3 years). This allows quicker liquidity while enabling long-term compounding for wealth creation alongside tax savings.
4. Choose Growth or Dividend Options
Opt for the growth option for wealth accumulation or the dividend option for periodic income while enjoying tax benefits. Dividends are tax-free as investments are made from post-tax income.
5. Combine Wealth and Tax Benefits
Unlike traditional instruments, ELSS invests in equity markets, offering higher potential returns while saving taxes. This dual benefit fosters long-term wealth creation.
Conclusion
The Motilal Oswal ELSS Tax Saver Fund demonstrates how strategic tax planning can align with wealth creation, delivering an impressive 36.01% CAGR over three years. As a Section 80C investment option, ELSS offers unique advantages including the shortest lock-in period of three years among tax-saving instruments and the potential for higher returns through equity market exposure.
By implementing systematic investment plans (SIPs), investors can efficiently manage their tax liability while building long-term wealth. Additionally, the Motilal Oswal ELSS Tax Saver Fund’s robust performance, managed by experienced professionals and backed by Motilal Oswal’s research expertise, makes it an attractive option for investors seeking to balance tax optimization with portfolio growth.
Written By: Dipangshu Kundu
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