Is ELSS taxable on maturity? (2024)

Is ELSS taxable on maturity?

After The Lock-In Period.

Is ELSS tax-free on maturity?

Long term capital gains of up to Rs. 1 lakh a year from ELSS mutual funds are exempt from income tax and long-term capital gains above Rs. 1 lakh are taxed at 10%.

What happens when ELSS matures?

As your investment principal matures, ELSS exit strategies become more important. ELSS funds offer attractive returns on their equity investments, and the lock-in period makes you invest for a longer period. You cannot redeem your funds over those years and face the choice after three years.

Is ELSS withdrawal after 3 years taxable?

ELSS investments held for more than three years are considered Long-Term Capital Assets and any gains from redemption are subject to Long-Term Capital Gains Tax (LTCG) at a rate of 10% on gains exceeding Rs 1 lakh. Additionally, the gains are eligible for indexation benefits, reducing the tax liability.

Are gains on ELSS taxable?

Since ELSS funds are locked-in for three years, there is no possibility of realising short-term capital gains. Therefore, you can realise only long-term capital gains. These gains of up to Rs 1 lakh a year are made tax-free, and any gains above this limit attract a long-term capital gains tax at 10%.

How much tax do I pay on ELSS after maturity?

You can claim a deduction of upto Rs 1.5 lakh for investment in Equity Linked Savings Scheme and save tax upto Rs 46,800. As it comes with a lock-in period of 3 years, you can not redeem it before 3 years. Hence, when you redeem your ELSS funds, you must pay long-term capital gains tax at 10%.

What are the disadvantages of ELSS?

What is the tax refund for ELSS?

ELSS funds qualify for tax exemptions under Section 80C of the Income Tax Act. Deductions of up to Rs. 1.5 lakh can be availed on the amount invested on ELSS funds. Supporting documents have to be provided by the policyholder to claim deductions.

Should I invest all my money in ELSS?

Any individual or HUF looking to save up to Rs 46,800 a year on taxes can consider investing in ELSS. However, these funds are suitable only for those who are willing to take some risk and can stay invested for at least the mandatory lock-in period of three years should invest in ELSS.

Can I sell my ELSS before 3 years?

Nothing happens because you can not sell units in ELSS before the lock in period of 3 years. That is what is called lock in. Your units are locked and you can not sell them under any circ*mstances.

Are all ELSS funds tax-free?

Since ELSS funds are locked up for three years, there is no way to realize short-term profit gains. As a result, you can only realize long-term capital gains. These gains are tax-free up to Rs 1 lakh per year, and any earnings beyond this amount are subject to a 10% long-term capital gains tax.

How to claim tax exemption on ELSS?

If you invest in one or multiple ELSS schemes, you can claim a maximum deduction of Rs 1.5 lakh in a financial year. There is no condition about the number of ELSSs to qualify for the tax deduction. In short, you can invest Rs 1.5 lakh in a single ELSS and claim tax deduction on the entire amount.

Does ELSS give negative returns?

There were 40 ELSS schemes. All schemes had offered negative returns during the January-March quarter. Out of 40 schemes, 35 schemes managed to beat their benchmarks. The tax saving or ELSS mutual fund category lost around 3.89% on average in the January-March quarter in 2023.

Is ELSS better than PPF?

The choice between ELSS and PPF depends on your financial goals and risk tolerance. ELSS may offer potentially higher returns with more risk, suitable for those seeking growth. On the other hand, PPF provides stability and security, making it preferable for conservative investors focused on long-term savings.

Do ELSS pay dividends?

If you invest in an ELSS mutual fund scheme, you may or may not choose to obtain a dividend from your investment. If you select the dividend payout option, you qualify to receive it if the fund declares any.

Which is better, ELSS or mutual fund?

The major difference between ELSS and any other equity mutual fund is the tax benefit and the lock-in period. ELSS attracts many investors as it provides tax benefits under section 80C. No doubt tax planning and saving is a better way of managing your finances.

Is ELSS interest compounded?

Equity Linked Savings Scheme is a type of equity mutual fund with a lock-in period of three years and a tax-saving element. As ELSS returns are linked to equity market movements, it does not provide compound interest like a FD.

When should I invest in ELSS for tax benefit?

However, for ELSS mutual fund investment to be eligible for tax break for current financial year 2023-24, the investment must be done between April 1, 2023 and March 31, 2024.

How long should you invest in ELSS?

Start a SIP in an ELSS scheme for the long term. After completion of 3 years, in the 37th month, start a Systematic Withdrawal Plan (SWP). The SWP can be in the different ELSS schemes for the same amount for the coming years. The lock-in period of ELSS Investments ends after 3 years.

Who should not invest in ELSS?

You can have good returns, but there are also chances of an investor making low to negative returns hence don't invest in an ELSS if your time horizon is 3 years. Invest for the Long term.

Does ELSS give better returns?

These equity-linked instruments have the potential to offer higher returns and are an ideal choice of investment for the long term. ELSS holds its ground, even with its returns being taxed, with higher post-tax returns than any other Section 80C investment options such as Public Provident Funds (PPFs) and ULIPS.

Why is ELSS tax free?

Short term capital gains tax is not applicable in case of ELSS Funds as it is locked in for a period of 3 years. However, in case of equity funds, short term capital gains are taxed at the rate of 15% plus the applicable cess and surcharge. In the case of ELSS, all capital gains will be long term capital gains.

Is ELSS taxable after 5 years?

Taxation of ELSS Funds

Since ELSS funds come with a lock-in period of three years, you can realise only long-term capital gains. These gains of up to Rs 1,00,000 a year are made tax-exempt. Any gains above this limit are taxable at 10%, and there is no benefit of indexation provided.

Which bank is best for ELSS?

How are ELSS returns calculated?

and the potential for long-term capital appreciation. The ELSS mutual fund calculator takes into account the investment amount, investment period, expected rate of return, and the investor's income tax bracket to calculate the potential returns, tax savings, and final investment value.