Most frequently asked question in Finance field is why investment in tax saving funds. It is beneficial or not. Yes it’s beneficial for all who have taxable money. Means any one can invest in tax saving funds online who they are payable for tax. Some important few reason to invest in ELSS.
No age limits are required to invest in tax saving funds. So everyone who has taxable income should invest in tax saving funds to save tax. ELSS is little risky for short term investment but for long term the story is different, invest in long term and save tax.
Returns is Tax free
The returns you will earn from Tax saving will also be tax-free because there is no long-term capital gains tax payable on equity. On FDs, the income is taxable and TDS is deducted yearly. The yearly assumption of TDS further reduces returns by making less money available for long-term compounding.
Tax Saving is Liquid
Tax saving funds is more liquid because the lock-in period is 3 years. Due to less lock-in periods it’s more beneficial as compared to FDs. You can release funds with profit after completing the lock-in period.