Tax savers start hunting for best ELSS ahead of tax-saving season
Traditionally, January to March is known as the tax-saving season.
“Tax-saving exercise has started. The queries will rise as we move near the financial year end. Most of those enquiring now, belong to the salaried group as they have to submit the proof of investments made under Section 80C, by January end. Accordingly, their tax due for the whole financial year will be computed and deducted from their salary,” says Shweta Jain, founder, Investography.
According to some mutual fund advisors, many taxpayers typically wake up every year around this time to finalise investments to save their taxes.
“We have always seen ELSS inflows rising in the last quarter of the financial year. Investors should treat their ELSS investments as regular investments and invest in a disciplined manner throughout the year instead of rushing to invest 1.5 lakh rupees towards the year end,” says Sharad Singh, founder, CEO, Invezta.
According to Amfi data, Q4 of 2017-18 witnessed ELSS inflows worth Rs 9,881 crore, the highest among all the four quarters in the financial year. Q3 received flows worth Rs 4,812 crore, Q2 saw inflows of Rs 4,173 crore and Q1 saw Rs 3,426. Similarly, inflows in ELSS were the highest in the Jan-March quarter of 2016-17 (Rs 6,677 crore), as against other quarters (Rs 3,305 cr in Q3, Rs 2,391 cr in Q2 and Rs 2,251 cr in Q1).
Investing in a rush has its own drawbacks, warn advisors. Investors might end up making wrong choices due to lack of time.
“Starting late does not allow investors to compare different products and to make informed choices. For instance, there are people who ask us different options other than ELSS or they ask about risk involved in ELSS even if they have invested before. They ask us to make a good combination of products in the last minute. They are not aware of their options and right choices, “ says Jain.
Mutual fund advisors believe the beginning of a financial year is the best time to start investing in an ELSS fund and it should be continued in a disciplined manner through SIP. While this will save you from making wrong choices in a rush, you will also get over the lock-in period of three years sooner.
“Do not forget that ELSS investments come with a lock-in period of three years. The sooner an investor invests, the sooner s/he will complete the lock in, says Singh.
Looking for the best ELSS to invest this financial year to save taxes, you may read this: Best ELSS to invest in 2018