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Faster, easier and secure gateway to e-file income tax return

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Tax Saving Funds Can Save Bigger on Income Tax Return

2/14/2017
Tax Saving Funds Can Save Bigger on Income Tax Return

The income tax return filing date is ticking the calendar and taxpayers are getting more calculative to save more on that.  Tax saving is always a big matter of concern for the Indian taxpayers and investments are the usual way to fulfill that. Previously, investments were mostly made into fixed deposits and stocks to get bigger income tax refund but the picture of investments has changed a lot in last few years. In last few years, mutual funds have attracted a lot of investor's eyes and the credit definitely goes to the increasing investment education.

Mutual funds are now accepted as a safer route to save on income tax return and investors no longer see the risk in equity investments. The result can be clearly seen in the number of Demat accounts opened in last year which is much higher than last 8 years. Demat accounts are mandatory for investing in stocks and bond securities to be held in a digital format. This trend of getting income tax refund by mutual fund saving increased even more with the Equity-Linked Savings Scheme (ELSS) become eligible for tax-saving investment. These funds are not only income tax saver but also deliver 30% returns in 12 months and are much similar to the equity mutual fund in nature. It comes with a mandatory 3 years of lock-in period which is shorter among all other income tax return saving schemes.

Indian Government provides tax rebate up to INR 1.5 lakhs/FY against such investments and such is referred under the Sec 80C of the Income Tax Act, 1961.  The products included under this sections are various bank deposits, savings schemes, ELSS and bonds which ensure maximum income tax refund on ITR filing. ELSS offers a lock-in period ranging from 3 years to 10 years and investors can pick the product they want according to their need. Lock-in periods are must for these fund investments and is quite flexible way to choose for saving income tax return.

Accept ELSS, there are other investments one can choose to save tax but their flexibility or performance does not match to that. For instance, Motilal Oswal Most Focused long-term funds deliver a one-year income tax refund of 40 percent. Another fund called, Mirae Asset Tax saver fund deliver a one-year return of 39.29 per cent. The HDFC Tax Saver fund deliver a one-year return of 39.14 per cent. Principal tax saving funds deliver a one-year return 36.59 percent.

It is depending on the investors to choose the right income tax return saving fund according to the concerned fund condition.