Do all mutual funds qualify for tax saving benefits or is it only a specific set of MFs like ELSSs that qualify for tax benefits? Are all ELSS funds covered under tax exemption or any specific set of funds? Is it covered under section 80C or we can get a rebate under any other section? I have exhausted my Section 80C investment limit of Rs 1.5 lakh along with investments of Rs 50,000 in NPS. Looking forward to tax-saving investment tips for my working wife and myself.
- Ritin R Srivastava
No, all mutual funds do not qualify for tax deductions under Section 80C of the income tax Act, Only investments in equity-linked saving schemes or ELSSs qualify for tax deduction under section 80C. Investors can invest in ELSSs and claim tax deductions of up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
Some solution-oriented funds like - retirement savings funds also give tax benefits but with a longer lock-in period.
Investments in NPS qualify for exclusive tax deduction under Section 80CCD(1B). That means you can invest Rs 1.5 lakh for deductions under Section 80C, and extra Rs 50,000 for additional tax benefit under Section 80CCD(1B).
Best ELSS Funds to invest in 2021
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List of Best Mutual Funds Under 80C in India 2024
| Fund Name | Sub-Category |
|---|
| Bank Of India Tax Advantage Fund | Equity Linked Savings Scheme |
| Motilal Oswal ELSS Tax Saver Fund | Equity Linked Savings Scheme |
| Sundaram LT Micro Tax Advantage Fund | Equity Linked Savings Scheme |
| ITI ELSS Tax Saver Fund | Equity Linked Savings Scheme |
6 more rowsMar 6, 2024
Mutual funds are not tax-free except for ELSS (equity-linked savings schemes or tax-saving funds) and some retirement funds. As per the Income Tax Act, under Section 80C, you can claim a deduction of up to Rs. 1.5 lakh for investments made in ELSS and can save taxes up to Rs.
What all comes under section 80C? ›
What is 80C in Income Tax and its Sub-sections. Section 80C permits certain investments and expenses to be tax-exempted. By well-planning the 80C investments that are spread diversely across various options like NSC, ULIP, PPF, etc., an individual can claim deductions up to Rs 1,50,000.
Is SIP investment eligible for 80C? ›
Which SIP is tax-free under 80C? Equity-Linked Saving Scheme (ELSS) SIPs are eligible for tax savings under Section 80C of the Income Tax Act. An investor can claim a tax deduction up to Rs. 1.5 lakhs by investing in an ELSS SIP.
How do I get 80C certificate for mutual funds? ›
To download your tax statement for ELSS:
- Open your profile.
- Click on 'Reports'.
- Under 'Tax Filing', click on 'Tax Proof - 80C ELSS Statement'.
- Select the financial year to download the report.
- Click on 'Download' to download the report.
Tax-saver index funds are eligible for tax deduction under Section 80C of the Income Tax Act, 1961. This means that investors can deduct up to ₹1.5 lakh from their taxable income for investments made in these funds.
What is a tax saver mutual fund? ›
Tax saving mutual funds like ELSS are similar to any other mutual fund scheme with an added advantage of saving tax. These funds help investors (Individual and HUF) save taxes under Section 80C of the Income Tax Act, 1961. Investing in ELSS qualifies for a tax deduction of up to Rs. 1.5 lakh.
What is the difference between ELSS and mutual fund? ›
The only major difference between ELSS and mutual funds is the tax deduction and lock-in period. If you are looking for an investment plus tax saving option, ELSS funds can be considered.
Is HDFC mutual fund eligible for 80C? ›
These funds have a lock-in period of three years. When you invest in HDFC MF ELSS Funds, you become eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. In this, the amount invested by you gets deducted from your taxable income.
What is the new tax regime for 80C? ›
Individuals opting for new tax regime cannot claim this deduction. Various investments and expenditures are specified under Section 80C of the Income-tax Act. If individuals make these investments or expenditures, they can claim a maximum deduction of Rs 1.5 lakh from gross taxable income in a financial year.
Some tax saving options other than 80C include deductions for health insurance premiums paid for yourself or family u/s 80D, deduction for interest on education loan u/s 80E, and deduction for house loan interest u/s 24. Similarly, there are other deductions, such as 80G, 80TTA, 80DDA, 80G, etc.
Can I invest more than 1.5 lakh in 80C? ›
Your total investment upto 1.5 lakhs will only be allowed as deduction u/s 80C. The additional contributions do not have any problem from tax point of view, except that you cannot claim deduction u/s 80C on them.
What kind of mutual funds come under 80C? ›
An ELSS fund or an equity-linked savings scheme is the only kind of mutual funds eligible for tax deductions under the provisions of Section 80C of the Income Tax Act, 1961. You can claim a tax rebate of up to Rs 1,50,000 and save up to Rs 46,800 a year in taxes by investing in ELSS mutual funds.
Does the SBI small cap fund come under 80C? ›
Equity: These Mutual Funds invest mostly in equity stocks (up to 100%). ELSS/Tax saver subcategory within equity allows tax benefits under section 80C of the Income Tax Act and has a lock-in period of 3 years.
Are mutual funds and SIP the same? ›
SIP is a disciplined way to invest in mutual funds with fixed instalments, while a mutual fund is the actual investment option you choose. A systematic investment plan (SIP) is a method of investing in mutual funds, where a fixed amount is invested at regular intervals.
Is FD comes under 80C? ›
A tax-saving fixed deposit (FD) account is a type of fixed deposit account that offers a tax deduction under Section 80C of the Income Tax Act, 1961. Any investor can claim a deduction of a maximum of Rs. 1.5 lakh per annum by investing in a tax-saving fixed deposit account.
Do I claim mutual funds on Income Tax? ›
The funds report distributions to shareholders on IRS Form 1099-DIV after the end of each calendar year. For any time during the year you bought or sold shares in a mutual fund, you must report the transaction on your tax return and pay tax on any gains and dividends.
Is Nippon India mutual fund eligible for 80C? ›
Individual and HUF having taxable income of less than Rs 50 Lakhs are entitled to get deduction up to Rs 1.5 Lakhs from their gross total income for investment made under ELSS scheme during one Financial Year. This deduction is available as per the provision of section 80C of the income tax act 1961.
Are mutual fund expenses tax deductible? ›
While these fees may be directly tax deductible on line 22100 of your tax return, the fees paid for a mutual fund are indirectly tax deductible. This is because mutual funds flow through their net income to the fund's unit holders.
