is paid on the balance. For someone in the highest IT slab
of 30.9 per cent, (including the education
cess of 3 per cent which applies on tax plus
surcharge) an investment of Rs. 1 lakh in one
or a mix of Section 80C instruments reduces
the individualâ€™s total taxable income by Rs.
30,900/-. For those with income above Rs. 1
crore, there is a surcharge of 10 per cent on
tax payable in addition to education cess.
Hence, for them the tax rate is 33.99 per
cent. The list of specified instruments
includes equity-linked savings scheme
(ELSS), an equity-based MF scheme. As the
name goes, ELSS is a savings scheme that
is linked to equity. ELSS is a type of MF
scheme that is formulated under ELSS
guidelines and is similar to any diversified
equity MF and routes investments into the
equity market. However, it does come with
some intrinsic features that differentiate it
from other MFs. ELSS gives tax benefit on
the amount invested and hence comes with
a lock-in period of three years. One can
invest up to Rs 1 lakh in a single or a
combination of ELSSs.
There are two options to choose from in an ELSSâ€"dividend and growth. One can buy units under this scheme with a minimum amount investment of Rs. 500 and in multiples of Rs. 500 thereafter. Investments can either be in lump sums or through the systematic investment plan (SIP) route.