Easy and famous investment options for Efficient Tax Planning

  • Posted By : reliancesmartmoney.com
  • Tuesday Nov 27, 2018

You might know that Section 80C allows you to save up to Rs.1.5 Lakh per annum by investing in tax saving instruments. However, returns on the amount saved depends on the tax saving scheme you choose. Mutual funds are easy tax saving options.

Here are the reasons why you should plan your taxes through mutual fund investments:

  • Professionally Managed

  • Experienced fund advisers who are experts in market research manage mutual funds. For a new investor, mutual funds offer better tax saving options as they don’t have to worry about market dynamics.

  • Higher Returns

  • Tax saving in mutual funds offer higher returns than any other instrument.
    See table 1 below.

    Tax Saving Instruments

    Interest rate source: RBI 3-5 years term Deposit Rate










    Investment in Equity Linked Savings Scheme (ELSS) provides better returns than other tax saving instruments like Public Provident Fund (PPF), National Savings Certificate (NSC) and Fixed Deposits (FDs). ELSS is a type of diversified fund where more than 80% of the fund is invested in equity. Considering higher returns, ELSS is one of the most recommended tax saving schemes.

  • Diversification

  • Mutual funds help you get the best of each asset class (equities, bonds, treasuries etc.). These funds help you diversify risk associated with each asset class. Even if some stocks in your investment basket are not performing well, the outperforming stocks will balance them, giving handsome returns.

  • Convenient

  • You can choose from a variety of schemes while investing in equities. Tax saving in mutual funds can be done by comparing performance of stocks using the Compare feature.

  • SIP reduces your burden

  • Systematic Investment Plan (SIP) allows you to invest a pre-determined amount at a fixed period of time. Rather than investing all at once, you can save from your monthly income. Investing certain amount of your monthly income will save you from the last moment burden of investing Rs.1.5 Lakh all at once.

  • Lock-in Period

  • Tax saving instruments





    Lock-in period

    15 years

    5 years

    5 years

    3 years

    ELSS has the lowest lock-in period as compared to other tax saving instruments like PPF, FD and NSC. Further, ELSS investments don’t have a maturity period. Thus, you can stay invested for as long as you want after your lock-in period ends.


    ELSS enables tax savings and helps you convert your tax saving instrument into a high return investment. Start your SIP by investing in mutual funds ; the easiest and famous tax planning option.

Easy & Famous Tax Planning through Mutual Funds

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