I want to know whether I can invest in ELSS schemes for tax exemption now? I want tax benefits for 2020. How much should I invest? Which are the best mutual fund schemes for the tax-saving purpose?-Victoria Michael
You can invest in tax-saving mutual fund schemes or ELSS and claim tax benefits under Section 80C of the Income Tax Act. Usually, you can claim tax benefits on investments made during the financial year. However, the government has extended the deadline to make tax saving benefits for the last financial year to July 31 due to the Covid-19 pandemic. That means, if you haven’t made your tax saving investments for the last financial year, you still have a week to do it. If you want to claim tax benefits under Section 80C for the current financial year, you can invest now or start investing now. You can claim tax benefits on investments made till March 31 in the current financial year.
It seems you are new to mutual funds. If so, you should seek the help of a mutual fund advisor. ELSS schemes invest in stocks and they have a mandatory lock-in period of three years. Remember, that you can sell your investments only after three years in these schemes. Though the mandatory lock-in period is only three years, you should always invest in equity schemes (including ELSS) only if you have an investment horizon of five to seven years.
Here are our recommended ELSS funds:
Best ELSS funds to invest in 2020