InvestorQ : Which funds offer tax benefits? How can I claim tax benefits?
Rohan Bhadani made post

Which funds offer tax benefits? How can I claim tax benefits?

Deepali Khupte answered.
3 years ago

ELSS funds are the mutual funds that offer tax benefits to investors. Besides that, ELSS funds also help generate wealth for the investor in the long term, with the added benefit of having the lowest lock-in periods.

ELSS funds help you lower your taxable income by Rs. 1.5 lakh, thereby reducing the amount you need to pay as tax.

Now when it comes to claiming your tax benefit, the process is actually quite easy. Please note, though, that one can only claim tax benefit up to Rs. 1.5 lakh per financial year. So, it doesn’t matter if you have one ELSS fund or ten, the maximum that you can claim is Rs. 1.5 lakh.

Upon investing in the ELSS fund, the total amount that you have invested, up to Rs. 1.5 lakh, can be deducted from your taxable income by showing it under Section 80C of the Income Tax Act.

So, if you are a salaried individual, you need to show the receipts of your payment towards your ELSS fund to your HR or Payroll team. The respective teams take your investment into consideration and accordingly process your Form-16, which will automatically show the entry of your payment towards ELSS.

If you are in to your own business, and are not employed by any organisation, then you can show the same payment receipts to your CA who will compute your tax and process your Form-16 accordingly.

Please note that you don’t need to invest in a new scheme every year in order to claim your tax deduction.