Get the Benefit of Returns and Tax Savings with Mutual Funds

Mutual funds are an asset class that has proved to be very popular. According to a recent survey, India’s mutual fund industry has grown 12.5% annually on average in the last 10 years. There was matched by a rise in assets by 17.33% from the previous year.

The reasons for this are not hard to understand.

To begin with, mutual funds are professionally handled by portfolio managers who have experience and expertise in investment matters.

They are also very flexible. Whatever your risk appetite, your investment objectives, or the amount you have to invest be, there are mutual fund plans that are designed for you.

Another unbeatable advantage is that mutual funds can be a tax saving option.

This type of tax saving fund is eligible for tax benefits under section 80C of the Indian Income Tax Act. Most of these are known as Equity Linked Savings Schemes (ELSS) and they invest in the equity market.

A Closer Look at Tax Saving Schemes

Because ELSS mutual funds are equity schemes, they can give you higher returns. Such tax savings schemes, however, are for those who understand the risk of market volatility, especially in the short term.

Investments in such ELSS funds are eligible for tax deductions of up to INR 1.5 lakhs under Section 80C of the Income Tax Act.

These tax saving mutual funds have a mandatory lock-in period of three years. This is a relatively short time, especially when you consider that the investment is in equities.

Compare this to National Saving Certificates, with a minimum lock-in period of five years, or Public Provident Fund with a minimum lock-in period of 15 years.

You do not need a large sum to start investing in tax saving mutual funds. An affordable monthly amount via SIP is enough for you to begin.

There are two types of ELSS schemes: a dividend scheme and a growth scheme. Dividend schemes allow you to get extra income as dividends declared by the fund house, depending on performance and surplus. Growth schemes provide long-term capital appreciation, to be redeemed at the end of the maturity period.

The dividends are not subject to tax or lock-in periods. These can be withdrawn or reinvested in the fund and then will become eligible for tax benefits. Long-term capital gains under these schemes are also not taxed.

This is why investments in these tax saving funds are an excellent way to plan for larger future expenses like buying a new car or down payment for a house.

Why You Should Approach Sykes & Ray Equities for Tax Saving?

At SRE, we’re proud of the bonds we have built with investors over the years. This is because our guiding principle is to put the client’s needs first.

We believe that every investment should come with an investment plan. We take time to understand your goals and resources, and only then do we recommend an investment.

For example, when it comes to tax saving schemes, we will not recommend one only because of tax benefits. We’ll show you how it will fit into your larger investment plan and how it will help you reach targets.

As one of the pioneers in investment planning, with 30 years of rich experience, our investments are recommended by a team of certified financial planners who act on the recommendation of our research desk.