My father retired from work a few years ago. At his age, should he invest in ELSS to save on taxes? - Kumar Deep, Noida
Equity linked saving schemes (ELSS) is a type of mutual fund with a three year lock-in. The investment in this type of fund has at least 65 per cent exposure to equities. Like any other tax saver, investments made in this fund qualify for tax deductions under Section 80C up to Rs.1.5 lakh. Tax savings has nothing to do with age; yes, if your concerns are with the risks associated with equity investments, you should evaluate if your father can stomach the risk before investing in these funds to save taxes. ELSS is a good option for saving taxes, because this is one option with the shortest lock-in among tax savers, and is also the sole mutual fund scheme where only individuals and HUF can invest.
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