Why is ELSS better than other tax saving investments?

There are various investment options available under Sec 80C of the Income Tax Act that allow an individual to claim deductions from their Taxable Income by investing and declaring investment in these options. These instruments include the Employee Provident Fund, Public Provident Fund, Life Insurance Policies, Long Term Fixed Deposits and Tax Saving Mutual Fund Schemes also called Equity Linked Savings Schemes (ELSS).

We looked at various parameters to compare ELSS over other investment options and summarize below why ELSS may be a better investment than other options.

ELSS PPF NSC Fixed Deposits
Description Mutual Fund Schemes that invest in Diversified Equity Public Provident Fund National Savings Certificates FDs of greater than 5 years
Pre-mature withdrawals Not permitted Conditional Not allowed No tax benefit if withdrawn before 5 years + premature withdrawal penalty
Provider Asset Management Companies GOI Department of Post Commercial Banks
Minimum Amount that can be invested 500 500 100 Variable
Lock In for Tax Exemption 3 years 15 years 6 years 5 years
Risk High Low Low Low
Taxation None None Interest Taxable Interest Taxable
Returns Market Linked 8.5% 8.0% (NSC VIII) 6.5% (SBI)


As you can see from the above table, ELSS schemes have the potential to offer higher returns(though not guaranteed), have shorter lock-ins and all elements including Principal and Capital Gains if any are tax free.

If you have not invested in ELSS schemes before, please do consider them for tax saving this year. They have proved to be a smart way to save taxes as well as earn returns higher than inflation. And when you use Kuvera to make these investments, there are no commissions paid on your investment by Mutual Funds as we are a Direct Plan Only platform. This puts even more money in your pocket over the course of your investment.

So Invest Smart and save taxes and commissions today by Investing in ELSS Schemes through Kuvera.

Please visit www.kuvera.in to invest in Direct Plans of Mutual Funds and save BIG on commissions!!!

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3 Responses

  • abc1234567

    January 14, 2022 AT 04:45

    Is capital gains on ELSS tax free? Please explain how.

    • Gaurav Rastogi

      January 15, 2022 AT 12:55

      Capital gains on ELSS are not tax free.