Mutual​‍​‌‍​‍‌​‍​‌‍​‍‌ Funds Comes Under 80C

Do you want to save taxes through mutual funds? Then here is a piece of fantastic news for you - mutual funds are covered under 80C but not all of them! Let's not complicate the matter and allow you to take advantage of this concession today.

What Mutual Funds are Considered Qualifying Under Section 80C?

Section 80C of the Income Tax Act helps you save on taxes while you invest for your future. You can claim up to ₹1.5 lakh every year by putting money into approved investment options. When it comes to mutual funds, only a special type called Equity Linked Savings Scheme (ELSS) qualifies for this benefit. So, if you’re planning to invest and save tax at the same time, ELSS funds are the ones to look at.

Quick tip: Only ELSS mutual funds are entitled to tax benefits that you cannot extend to regular equity or debt funds.

ELSS mutual funds

Regular investments in ELSS funds

One-time investments in ELSS

ELSS from any well-known AMC

The units purchased during the year (up to the ₹1.5 lakh limit)

We can understand this better with an example.

How Much Tax Can You Save?

Suppose, this year you invest ₹1,20,000 in an ELSS mutual fund. By tax filing you can claim it as a deduction from your taxable income thus saving tax. If you are liable to tax at the rate of 20%, a sum of ₹24,000 will be saved. Quite impressive, isn't it? 

But do not forget - ELSS funds are to be kept for three years.

Simple Steps: How to Get Started

The steps are quite simple:

Firstly, select an ELSS fund from reliable AMCs.

Next, decide whether you will do a SIP or a lump sum investment (whichever works best for you).

Then proceed to invest be sure your placement is under 80C.

Keep an eye on your total so that it does not exceed ₹1.5 lakh/year.

While filing your IT return, make the deductible claim.