22/01/2019 11:21 AM IST | Updated 22/01/2019 11:21 AM IST

1 epic way to save on taxes in 2019 - ELSS

‘Tis tax-time, the season to be broke-y, fa-la-la-la-la la-la my wallet’s empty!

Greetings, overworked and underpaid corporate employee, this article has been written by a man in your shoes who found an awesome way to save on income tax in India. Invest in Equity Linked Savings Schemes with Fundsindia - ELSS Funds are the unsung and misunderstood heroes we didn’t know we needed.

They aren’t that complicated - it’s just a type of mutual fund scheme that has the added benefit of being tax-deductible. They’re equity-based schemes and have a lock-in of 3 years.

For the really new corporate employees who don’t know what a tax-saving investment is, or why it’s necessary, or why Section 80C is such a big deal (what happened to the 79 other Sections, man?) it’s really quite simple:

  1. Your employer pays you.

  2. The government wants a big bite of your paycheck to “build roads” and “not indulge in corruption-related stuff”.

  3. Now you have to save that bit of your income that the government is legally allowed (yes, you agreed to this) to take from you.

  4. No one cares much about those other sections but you can read about them here.

Quick refresher - you get taxed according to your income - the more you earn, the more you pay (that raise was a double edged-sword, now you know). Here are the tax slabs as of today for Indians under 60 years of age:

Income up to Rs.2,50,000 a year: Go away this article doesn’t concern you yet.

Income Rs.2,50,000 to Rs.5,00,000 a year: 5% tax and 4% “cess” on the income tax.

Income Rs.5,00,000 to Rs.10,00,000 a year: 20% tax and 4% “cess” on the income tax.

Income over Rs.10,00,000 a year: 30% tax and 4% “cess” on the income tax.  

Now you can bring your “taxable income” down by Rs.1,50,000 by investing in Section 80C. If you’re earning Rs.6,00,000 p.a., you’re in the 20% tax slab, but if you invest Rs.1,50,000 into Section 80C, your “taxable income” drops to Rs.4,50,000 (Rs.6 lakh - Rs.1.5 lakh = Rs.4.5 lakh) and now you only have to pay 5% income tax. Neat, right?

If this is what you look like deciding how to save on taxes, read on!

Let’s jump right in - There are two, maybe three investment avenues you’re seriously considering to meet your Section 80C deductible quota of Rs.1,50,000:

    1. 5-year FD: 

         a. You give Rs.1,50,000 to a bank. 

         b. They lock it in for 5 whole years. 

         c. They return it after 5 years with a marginal rate of interest (around 6% to 7.2% on average) 

         d. Kind of like an invest-and-forget deal where you can’t really think about the money till 5 years later (because every time you do, you’ll remember that it’s locked in and feel sad).  

     2. ULIP: 

         a. You give Rs.1,50,000 to an insurance company. 

         b. They lock it in for 5 whole years. 

         c. A ULIP is half-investment and half-insurance product. Has been criticized for not being enough of either. It’s like losing a few insurance benefits for a chance at earning investment-returns.  

     3. ELSS:   

         a. You invest Rs.1,50,000 in a mutual fund scheme. 

         b. They lock it in for 3 years (the lowest lock-in). 

         c. You can withdraw your money after 3 years, or stay invested to watch it grow. 

         d. Average returns around 12% - 18% (highest for this category of investment).  

 

Save on taxes by investing in ELSS online in a totally paperless, hassle-free, and 100% secure online environment HERE. What’s more, expert market analysts and fund advisors will guide you towards the mutual fund scheme best suited to your individual needs. Invest online in mutual funds with fundsindia.

This woman saved so much with ELSS she bought her piggy bank a pair of glasses!

So investing in ELSS is really a no-brainer. You get the same tax benefits, lowest lock-in, and highest average returns. Start and track an online investment in ELSS right now, the last date for tax filing is just around the corner.