When choosing where to invest for saving tax, why not also think of the most efficient investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... considering the balance of both risk and return. There are several tax-saving investments like public provident fund (PPF), unit-linked insurance plans (ULIPs), national pension scheme (NPS), national savings certificate (NSC), equity-linked savings scheme (ELSS), long term fixed deposits, to name a few of the prominent ones.

Amongst all these, an equity-linked savings scheme (ELSS) which is a type of mutual fund scheme, has the features of efficient long-term investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains..., along with providing a deduction for tax saving under IT Act section 80 C.
This means the amount you invest in ELSS will be deducted from your taxable income for any income tax calculation. The maximum deduction allowed is up to Rs 1,50,000 a year.

ELSS invests in a portfolio of equity stocks and like other mutual fund schemes it is managed by a dedicated fund manager. There is a three-year mandatory lock-in, after which you can leave your money in it to grow or you can withdraw if you need the money. There is an annual cost which can range from 1%-2.5% depending on the scheme you choose. Also, remember this is a market-linked product. In the long run, 7-10 years or more you can expect returns which beat inflationInflation is a common term thrown around in economics lessons and by politicians around election time. What it means in simple language is that prices of things you buy, stuff, keeps increasing every year. It happens because the economy in... More with at least a 2%-3% margin, however in the near term there is likely to be volatility in the daily returns.

Along with inflation-beating returns, ELSS gives you a flexible, portable, liquid and easy-to-transact option for saving tax under section 80 C.

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