How ELSS scores over other tax-saving avenues

Indian tax laws offer savers an exhaustive range of tax-saving instruments like the Public Provident Fund (PPF), tax-saving fixed deposits, National Savings Certificate (NSC), Equity-linked Saving Scheme (ELSS), and others. And yet, it is extremely commonplace for people to make suboptimal decisions with their tax-saving investments. Why does this happen? One of the biggest factors responsible for this is the widespread tendency to see tax-saving goals and investment goals as at odds with each other, more or less. People are simply not thinking about tax-saving instruments the same way they think about other investments. That is to say, they do not prioritise the returns on these investments in the same way. Further, the typical investor makes this decision in late March under the duress of the fast-approaching deadline, or under pressure from a salesperson who drives home the fact that time is running out. The pressure may intensify if the sal

This article was originally published on January 28, 2021.