Here are a few ways in which SIPs can help you save tax:
SIPs (Systematic Investment Plans) are a popular investment option among individuals looking to invest in mutual funds.
They are particularly beneficial for those who wish to save tax. Here are a few ways in which SIPs can help you save tax:
ELSS funds: SIPs can be used to invest in Equity Linked Saving Schemes (ELSS), which are mutual funds that offer tax benefits under Section 80C of the Income Tax Act.
Investments in ELSS funds are eligible for a deduction of up to Rs. 1.5 lakh in a financial year.
Long term capital gains: SIPs in equity mutual funds can be used to take advantage of long-term capital gains tax.
When you invest in equity mutual funds through SIPs, the minimum holding period of 1 year for long-term capital gains starts from the date of each SIP installment.
Equity and debt funds: You can invest in equity funds or debt funds through SIPs to save tax.
While equity funds have a higher risk of volatility, they offer higher returns. Debt funds, on the other hand, offer lower returns but are less volatile.
Tax-free dividends: Mutual funds offer tax-free dividends, which can help you save tax.
When you invest in mutual funds through SIPs, you can receive tax-free dividends regularly.
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