Many investors keep postponing their tax planning until the tax filing date is just around the corner. As a result, they look around for tax saving options last minute and often end up investing in tax saving vehicles that give suboptimal returns.
The best way to avoid such situations is to start doing tax planning early in the financial year. This gives investors enough time to evaluate all the tax saving options. Early tax planning also gives sufficient time and comfort to invest the taxable income in a staggered manner. On the other hand, those searching for a last minute tax deduction option struggle with arranging the corpus and pay it at once.
One of the best options is to start investing in Equity Linked Saving Schemes (ELSS), which allows benefits in taxation and wealth creation. Under section 80C, investment in ELSS allows an investor to claim an exemption of up to Rs 1.5 lakh from his total income in a financial year.
Moreover, ELSS gives returns par-excellence because it is essentially the same as a diversified equity fund and invests at least 80% of its assets in equities. Unlike any diversified equity funds, however, an ELSS fund has a lock-in period of three years.
If you are looking to zero-in on a fund in the ELSS space, Aditya Birla Sun Life Tax Relief 96 is a good choice. The fund has given commendable returns in the long-term and outperformed most of the funds in this category.
Data from Value Research shows that in the past five years, the fund has given a return of 11.5%, as against the category’s average of 9.20%. In fact, since its inception on March 30, 1996, the fund has given a return of 23.6%.
Ajay Garg, Senior Fund Manager at Aditya Birla Sun Life Mutual Fund, manages this fund. Garg, who has more than 25 years of experience, also manages seven other funds. With over Rs 9,129 crore AUM, Aditya Birla Sun Life Tax Relief 96 is among the largest tax saving funds in the mutual fund industry.
