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How can we show the mutual funds in tax exemption?

I am investing SIP in ELSS. Will there be any documents created after I start investing for filing the tax exemption?

Devanshu Gupta

An investor does not get any tax exemption for investing in mutual funds unless the investment is made in the ELSS or Equity Linked Savings Scheme.

ELSS or Equity Linked Savings Scheme is a category of mutual funds that invests in diversified equity and also offers tax benefits under the section 80c of the income tax act of India. ELSS schemes have a fixed lock-in period of 3 years from the date of purchase of respective units.

The amount of exemption you get on your income is upto ₹1.5 lacs which can result in a maximum savings of ₹45,000.

 In other equity schemes though you may not get tax exemption but if the duration of investment is more than 1 year then the return earned on the investment is not subject to any taxation by the income tax department.

Also, an investor must keep in mind that Section 80C allows a total deduction of ₹1.5 lacs, so if you have already taken the deduction by investing in other eligible schemes like PPF you cannot exceed your sum total exemption amount by 1.5 lacs.

To read more about ELSS funds and tax benefits under them, please click here

Some of the top performing ELSS funds are:

Pijush Kanti Biswas

Tax Planning or Income tax savings are an integral part of investment and overall financial planning that helps in a bid to maximize wealth. One of the key sections under which individuals can save tax is the Section 80c of the Indian Income Tax Act. Under this section, investments up to 1,50,000 per annum are eligible for deduction from your taxable income.

 Only ELSS Mutual Funds offer tax benefits under section 80c of the Income Tax Act.

Equity Linked Savings Scheme (ELSS) is a dedicated mutual fund scheme that allows investors to save tax. It also provides an opportunity for long term capital appreciation. An ELSS fund manager invests in a diversified portfolio, predominantly consisting of equity and equity related instruments that carry high-risk and have the potential to deliver high-returns.

At the start of new financial year, the investor needs to submit Income Tax Declaration to employer stating the investment instrument you are using for tax savings of ₹1,50,000.

Before the end of financial year, you have to submit your investing proof to employer. In case of ELSS, you get the details of investment documents from your fund house.

Happy Investing!


Section 80C allows investors to save taxes on investments in certain financial instruments, including Equity Linked Savings Schemes. The maximum amount that can be claimed under Section 80C is Rs.1,50,000.

At the beginning of every financial year the investor needs to submit Income Tax Declaration to his/her employer stating all your proposed investments that are tax deductible.

At the end of the financial year, the investor needs to provide the supporting investment proofs for the investments declared at the beginning of the FY.

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