You can save up to Rs 46,800 a year in taxes by investing in equity-linked savings scheme (ELSS), the best tax-saving investment under Section 80C. The asset allocation of ELSS mutual funds is primarily made towards equity and equity-linked securities.
ELSS mutual funds are the best tax-saving investment under Section 80C of the Income Tax Act, 1961. They come with a lock-in period of just three years, the shortest among all tax-saving investments. These mutual funds have the potential to provide returns in the range of 12% to 15%.
ELSS funds are the only tax-saving investment with the potential to offer inflation-beating returns. Therefore, investing in ELSS mutual funds gives you the twin benefits of tax deductions and wealth creation over time.
Income Tax is levied on the annual income of taxpayers. It is levied based on the income you earn in each financial year (1 April of this year till 31 March of the next year) and not the calendar year. The previous year is a period for which a person has to pay tax. Assessment year is a 12 month period following the previous year, during which a taxpayer files his/her ITR.