Should you choose ELSS if your income is below the taxable threshold?

Equity linked saving scheme (ELSS) or tax-saving mutual funds, as they are commonly known, are a great way to avail tax benefits and invest for your long-term goals. They have generated an annualised return of over 14 per cent in the last 10 years. Investment of up to Rs 1.5 lakh in tax-saving funds is eligible for deduction from taxable income under section 80C of the Income Tax Act. These are pure equity funds and quite similar to flexi-cap funds in their investment mandate. The fund manager has the flexibility to invest across companies of different sizes and sectors in any proportion.

This article was originally published on July 18, 2022.