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Because taxes take up a large number of your profits, tax planning is essential to guarantee that you save and earn while still supporting the country’s prosperity. Tax-saving investments such as ELSS and PPF can also assist you in achieving your financial goals by maximizing the tax benefits granted by the Income Tax Act of 1961. Both provide tax benefits as well as the opportunity to profit from investments. This article compares ELSS and PPF mutual funds to help you determine which tax-saving plan is right for you.
The main mutual fund covered by Section 80C of the Income Tax Act of 1961 is the ELSS or Equity Linked Savings Scheme. ELSS funds have the shortest lock-in period of any Section 80C option. Nonetheless, it offers a greater chance of building long-term income, and people with a higher risk profile prefer it.
A large portion of the money invested in an ELSS goes into equity investments, with market-linked returns. As a result, market volatility has an impact on returns. It has been shown to be fruitful in the long run. In terms of returns, the best ELSS funds have beaten conventional vehicles like PPF and FD.
The Public Provident Fund (PPF) was established by the Indian government in 1968 to encourage residents to save and plan for their retirement. Except for NRIs, all Indian citizens are eligible to participate in the initiative. You can also open a joint PPF account for a teenager with a parent or legal guardian.
You can get benefit overtime of up to Rs.1,50,000 per year for investments made into your Public Provident Fund account under Section 80C of the Income Tax Act, 1961. A minimum of 15 years must be invested in a PPF account. You can prolong the lock-in period for another five years after it expires.