Investment Planning

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 individual’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.

  • Market Overview by
    Mr. Navneet Munot,
    CIO, SBI Mutual Fund