Mutual Funds Deduction Under Income Tax

As a result of this provision the dividend received from equity mutual funds is exempt from tax.

Mutual funds deduction under income tax. An elss comes with a lock in period of 3 years which means an investment made in it cannot be withdrawn before 3 years. Studies in the past have suggested that equity has delivered higher inflation adjusted return than any other asset class over the longer horizon. Most investors prefer to invest in this mutual fund instrument as it offers capital appreciation and tax benefits as well. If no kindly tell me investment in which mutual fund is eleigible for deduction u s 80c.

Tax benefit of mutual funds equity linked savings scheme elss is a type of equity fund and the only mutual fund scheme which qualifies for a tax deduction of rs. These are mutual funds schemes that are invested in stocks and come with a mandatory lock in period of three years. Therefore you cannot claim any tax deduction on your investments under section 80c. You can claim a deduction up to rupees 1 50 000 only under section 80c.

There are some mutual funds schemes that offer tax savings and are called elss or equity linked savings schemes and these are eligible for deduction under section 80c of the income tax act 1961. Only investments in equity linked savings schemes elsss or tax saving mutual fund schemes qualify for a tax deduction under section 80c of the income tax act. As per section 80c investment as subscription to any units of any mutual fund referred to in clause 23d of section 10 is eligible for deduction. In simple terms you can reduce up to rs 1 50 000 from your total taxable income through section 80c.

Whenever you are to file your income tax return then it is advised that you discuss with an income tax consultant first. Mutual funds that fall under the category of pension and elss will help you with tax savings under section 80c of the income tax act. Section 10 35 a of ita states that any income received in respect of the units of mutual funds specified u s 10 23d of ita is exempt from tax. Under section 80c a deduction of rs 1 50 000 can be claimed from your total income.

Only investments in equity linked saving schemes or elsss qualify for tax deduction under section 80c. This instrument come with a 3 year lock in period. A maximum of rs 1 50 000 can be claimed for the fy 2018 19 2017 18 and fy 2016 17 each. Elss or equity linked savings scheme is a type of diversified equity mutual fund that is qualified for tax exemption under section 80c of the income tax act.

Investors can claim tax deduction of up to rs 1 5 lakh under section 80c of the income tax act. This deduction is allowed to an individual or a huf. 1 5 lakh per annum under section 80c of the income tax act. Unfortunately none of your systematic investment plans sips are in elsss.

Investments in nps qualify for exclusive tax deduction under section 80ccd 1b.