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Tax Planning

ELSS Schemes offer Tax benefit u/s 80C and are also the best instrument to earn higher returns. One can invest Maximum Rs. 1,50,000 and save tax under sec 80C. ELSS Mutual funds have a lock-in period of 3 years unlike most other with lock in of 5 Years or more. One can opt for lumpsum as well as Monthly systematic investment which reduce the problem of hasty decision of saving tax during the financial year end.

Here are few tips which will help you to choose the best ELSS Funds.

Past Performance and Age of the fund: Past performance speaks tremendous about one’s ability and likelihood for success. Definitely past performance can’t guarantee future returns , but it gives you indication of how the fund manager was able to generate returns during ups and downs of market cycle, You can get a clear picture about the returns generate were because of bull market run or the strategies used by the fund manager.

However it is only possible with the funds which has track record of more than 5 years where a full market cycle get covered, new funds can only be judged based on the objective of the fund as well as fund allocation.

Consistency: This is very important for the people who have an investment time horizon of medium or long term, a fund can’t be judged based on its 1 year or 6 months returns.

For example, a fund which is consistently giving 12% returns is better than a fund occasionally giving 20% returns. While selecting a fund, higher return should be the criteria but consistency of return should be equally important.

Scheme / Category Name Return Consistency (% of times) Less than 0% 0 - 8% 8 - 12% 12 - 15% 15 - 20% Greater than 20% Aditya Birla Sun Life Tax Relief 96 - Growth Option 0 0 11 29 36 24 Invest Now DSP Tax Saver Fund - Regular Plan - Growth 0 0 21 24 36 20 Invest Now HDFC Long Term Advantage Fund - Growth Option 0 0 18 55 23 4 Invest Now Principal Tax Savings Fund 0 0 5 32 48 15 Invest Now Axis Long Term Equity Fund - Growth 0 1 26 37 18 18 Invest Now ICICI Prudential Long Term Equity Fund (Tax Saving) - Growth 0 4 63 14 11 9 Invest Now

Details Taken from period Dec 2013 to Dec 2018

Market Cap allocation: ELSS Funds are free to choose their allocation in equities; however you should also give certain weightage while selecting a fund basis your risk profile. A fund, having higher exposure towards large cap will take care of a moderate client’s risk profile, similarly, one should see what kind of allocation the fund has given to mid and small cap to assess the risk return trade off.

XIRR of the fund: XIRR helps in calculating the internal rate of return for scheduled cash flows. Many of us don’t have lump sum amount to invest hence choose to invest periodically. By calculating the XIRR we can further filter best funds.

Let’s look at the top performing SIPs on the basis of 3 year XIRR.

SIP Performance of the funds for last 3 years

Scheme Name SIP for 3 years Investment Amount 36000 Profit-SIP Profit-One Time Investment XIRR(%) Aditya Birla SL Tax Relief '96(G) 5900.85 14209.66 10.68 Invest Now DSP Tax Saver Fund-Reg(G) 4188.45 13729.96 7.69 Invest Now HDFC Long Term Adv Fund(G) 6140.08 17003.55 11.09 Invest Now Principal Tax Savings Fund 5432.03 15115.14 9.87 Invest Now Reliance Tax Saver (ELSS) Fund(G) 456.98 6431.99 0.87 Invest Now

Source: ACEMF

Rolling Returns

Scheme Name AUM(Cr.) Expense Ratio 3 Year Rolling Returns Aditya Birla SL Tax Plan(G) 664.58 2.36 16.00 Aditya Birla SL Tax Relief '96(G) 6984.25 1.91 16.54 Axis Long Term Equity Fund(G) 17626.14 2.08 13.45 BNP Paribas Long Term Equity Fund(G) 498.10 2.47 11.71 BOI AXA Tax Advantage Fund-Reg(G) 193.55 2.87 14.11 Canara Rob Equity Tax Saver Fund-Reg(G) 852.81 2.32 10.20 DHFL Pramerica Tax Plan(G) 35.11 2.70 13.38 DSP Tax Saver Fund-Reg(G) 4567.23 2.03 15.44 Edelweiss Long Term Equity Fund (Tax Savings)-Reg(G) 74.43 2.60 11.95 Franklin India Taxshield(G) 3686.58 2.03 11.81 HDFC Long Term Adv Fund(G) 1479.26 1.40 13.79 HDFC TaxSaver(G) 6734.52 2.11 10.73 HSBC Tax Saver Equity Fund(G) 155.53 2.68 13.36 ICICI Pru LT Equity Fund (Tax Saving)(G) 5486.14 2.27 10.52 IDBI Equity Advantage Fund-Reg(G) 627.13 2.34 11.94 IDFC Tax Advt(ELSS) Fund-Reg(G) 1688.58 2.22 16.13 Invesco India Tax Plan(G) 668.23 2.52 13.74 JM Tax Gain Fund(G) 29.95 2.70 13.91 Kotak Tax Saver Scheme(G) 766.16 2.42 12.98 L&T Tax Advt Fund-Reg(G) 3220.89 2.15 15.93 LIC MF Tax Plan(G) 190.17 2.78 10.97 Principal Personal Tax saver Fund 271.25 2.62 10.52 Principal Tax Savings Fund 379.42 2.64 15.96 Reliance Tax Saver (ELSS) Fund(G) 9847.75 2.25 12.82 SBI Magnum TaxGain'93-Reg(G) 6377.39 2.05 10.37 Sundaram Diversified Equity(G) 2607.10 2.15 14.36 Taurus Tax Shield Fund-Reg(G) 61.14 2.73 12.86 UTI LT Equity Fund (Tax Saving)-Reg(G) 1054.52 2.52 11.04

Source: advisorkhoj

Rolling returns are the annualized returns of the scheme taken for a specified period (rolling returns period) on every day/week/month and taken till the last day of the duration. We are showing the annualized returns over the rolling returns period on every day from the start date and comparing it with the benchmark.

Income Tax Calculator Assessment Year --Select Assessment Year-- 2015-2016 2016-2017 2017-2018 Age 0 TO 60

60 TO 80

80 & ABOVE Gross Salary Transport Allowance HRA Exemption Section 80C Deduction Sec 80CCD (1b) – Additional NPS Deduction Section 80D Deduction Section 80E Deduction Interest on Home Loan Other Deductions Total Tax Payable is Rs. X

Note * : Fill all the fields on the above Income Tax Calculator Income tax is not an unknown subject to any income earning person. Knowing the tax liability in advance helps an individual in tax planning. Karvy Value offers a simple calculator to calculate the tax liability of any individual post deductions offered under the income tax act. This would be helpful for the individual to invest in the required tax saving options. How to use this calculator? You need to input the following details to get the desired results: Assessment Year – Choose the assessment year for which you want to know the tax liability. Ex: AY 2017-18, AY 2016-17, etc. AY 2017-18 is also known as FY 2016-17.

– Choose the assessment year for which you want to know the tax liability. Ex: AY 2017-18, AY 2016-17, etc. AY 2017-18 is also known as FY 2016-17. Age – Select your age

– Select your age Gross Salary – Choose the gross salary as mentioned by your employer.

– Choose the gross salary as mentioned by your employer. Transport Allowance – Enter the transport allowance offered by the employer. Exemptions are allowed as per the applicable rules. Any changes in yearly budgets need to be factored in.

– Enter the transport allowance offered by the employer. Exemptions are allowed as per the applicable rules. Any changes in yearly budgets need to be factored in. HRA Exemption – House Rent Allowance (HRA) as offered by the employer needs to be entered. Exemptions differ based on the city you live in i.e. metro or non-metro.

– House Rent Allowance (HRA) as offered by the employer needs to be entered. Exemptions differ based on the city you live in i.e. metro or non-metro. Section 80C Deduction – Deduction is allowed up to Rs. 1.5 lakh per financial year. It is subject to change, though.

– Deduction is allowed up to Rs. 1.5 lakh per financial year. It is subject to change, though. Section 80D Deduction – Enter the health insurance premium, if any.

– Enter the health insurance premium, if any. Section 80E Deduction – Enter the amount of education loan premium, if any. There is no limit on the deduction available for education loans.

– Enter the amount of education loan premium, if any. There is no limit on the deduction available for education loans. Interest on Home Loan – Any interest paid on home loan can be availed as deduction u/s 24.

– Any interest paid on home loan can be availed as deduction u/s 24. Other Deductions – Enter any other deductions, if applicable

– Enter any other deductions, if applicable Click on Calculate to know the total amount of tax payable for the year. By knowing the amount of tax payable in advance, proper tax planning can be done so that further tax saving options can be explored to minimize the total tax payable.