Want to save tax and gain good return?


For salaried people, tax saving holds great significance. There are many people who fall in a large tax bracket, and they want to save tax with the help of some of the tax saving tools. Among the leading tools in the market, which can help one save tax, the mutual fund can be termed as the most viable one. One can find lots of companies in this segment that offer tax saver funds where one can invest in one shot or with the help of monthly installment. In this option, one can invest up to 150000 and reduce the tax liability to that extent. One can invest in a mutual fund which offers tax benefits and also good return over a period. The only condition here is one needs to keep the amount invested for a long period, such as 3 to 5 years. Hence one cannot withdraw this amount before the mentioned period. It is called the lock-in period in the terminology of the mutual fund.

Where to invest?

Those who know that mutual fund can help to save tax feel confused when it comes to investing as they are not sure where they can invest the amount. The market has ample companies with ELSS that is tax saving mutual fund, but each of the company has different options. Hence one needs to study the options first or ask an expert. Here one can also invest in installments where he can avoid the effects of the market on his investment. The expert can also offer him a true picture of investment and best tax saving sip to avoid the tax liability.

Check these points:

While going for investing in tax saving mutual fund, one needs to check a few points. He must study where the company will invest the amount and what return the company has offered to its investors. To have the best tax saving tips, also, one needs to go for research that can make one take right steps. If one goes for investment in one shot, there can be the effect of the bullish or bearish market, but the same can be avoided with the help of SIP. One can check with different companies to find the best tax saving sip and the amount he needs to invest every month. The lock-in period, amount and return can be checked from the company’s website also.

Why go for SIP?

If one has to pay the tax, he has to pay in one shot. If one goes for the investment in ELSS in one shot, he has to make immediate payment of the full amount. This can be avoided perfectly if one goes for the investment with the help of SIP where every month an amount will be deducted from his bank account and get invested in a mutual fund that offers tax benefit. At the end of the year, the invested amount is deducted from his income, and hence the income is reduced to that extent, which can offer an effect on his tax liability also. It is the option under section 80 C of the act which allows one to invest the amount in this option and earn benefits of the amount up to 150000.

The SIP benefits:

In SIP, one pays an amount every month. The NAV of the fund keeps on changing and hence in the month when the market is down, he can have low NAV and hence gets more units. In the month when the market is up, he can have fewer units as the NAV may be high, but it leads to an increase in the overall value of the units also. hence in both cases, the investor can benefit if he invests by SIP. That is the prime reason why many people prefer to go for this option for tax saving. Another leading benefit is one can have a good return on this investment as the amount will be kept invested for a considerably long period. Hence the amount which one might have paid as tax is also saved and adding to it he can have a good return in future with the main amount. Hence this option can help one to fetch benefits only.

How to invest in a mutual fund?

The mutual fund amount is also invested in the share market only, and hence, the investor bears the risk of market rates also. However, every mutual fund company has a dedicated manager for fund investment and monitoring who keeps an eye on fund movement and invests in those avenues only where he can get a good return on his investment.

An investor can invest the amount himself or with the help of a company or broker. If he hires a company or broker, he has to pay the amount by cheque with all the relevant documents. One who knows how to invest online can log on the site of the company and fill the application form online only. He can also pay the amount by online transfer to the company. Hence online option helps one to invest at any point of time.

The folio:

In this field, one comes across the term folio. The folio is as good as a bank account where one can get all the details of his investment. Once the payment is made to the company, the folio is generated automatically where there is a folio number. One can get the statement for each folio where he can find details such as name, folio number, PAN number, KYC status, address, phone number, email id, amount he has invested, date of investment, NAV as on the date, NAV at which he has got the units, number of units he is allotted, and overall status of his folio. Hence the statement can help one get complete detail of his folio. For each scheme and each company, there are different folio numbers that one have to remember. However, nowadays, one can get the statement on his email also, and hence, one does not need to maintain the hard copy of the folio. The NAV can also be known from the site of the company or customer care department.

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