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Fincash » Mutual Funds India » Tax Fever

Tax Fever - Don't Let Tax Season Bring You Down!

Updated on November 28, 2022 , 68135 views

Most of you have, at least once, been through the experience of having a significant amount cut as tax from your Earnings. This can be either due to not Investing in tax-saving options or investing at the last moment.

Despite this experience, Investing Early is not the norm – even though everyone is eager to avoid paying too much in Taxes, being prudent with one’s money and making timely investments is not usually a priority.

So, what happens when you miss planning your taxes in advance?

  1. You end up paying a lump sum at one go, instead of spacing out the investments
  2. You are unable to create a worthy Investment plan, which might help generate wealth for long-term as well as save tax

Axis Mutual Fund ELSS - Tax Saver

Why Tax Fever?

When it comes to tax saving, people have the habit of procrastinating, which is much like seasonal flu. With a delay in Tax Planning, you have higher chances of getting bitten by the tax fever bug. It’s like a disease you’ve to deal with reactively rather than proactively.

So, why not prevent it? Why not plan in advance to mitigate the effects of tax fever?

To penetrate the importance of tax planning in advance, 'Tax Fever', a recently released Ad campaign, nudges investors towards planning their tax savings early in the financial year. The campaign takes a humorous approach to ‘Tax Fever’ in India, which shows how people wait until the last moment to save their taxes.

The campaign features an emphatic news anchor yelling at a young guy for having enough time to play mobile games, but got no time to plan taxes. He continues to yell and makes the boy understand how he is failing to build wealth by paying taxes last moment.

In short, it is based on asking people why they go through the same cycle of procrastination-panic-last-minute tax investments every year and urging them to invest in ELSS as soon as they can to mitigate the effects of Tax Fever as much as possible.

Note: Hurry-up! You still have an opportunity to save tax and create wealth. You can plan your taxes before 31st July, 2020 and avail tax benefits for Financial Year 2019-20.

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Equity Linked Savings Scheme (ELSS)

An Equity Linked Savings Scheme (ELSS) is considered as the most popular tax-saving investment choices. It is a type of Mutual Fund that combines the dual benefit of tax saving and wealth creation. ELSS is a fund that predominantly invests in equity and equity-linked instruments to provide Market-linked returns.

It is the only untainted equity investment that offers deductions under Section 80C of the IT Act. You can invest up to Rs. 1.5 lakh per Fiscal Year and claim a tax Deduction of Rs. 46,800. ELSS comes with the lowest lock-in period of 3 years.

ELSS Vs Other 80C Investment Options

ELSS can play a significant role in your investment. Being an equity-linked scheme, it has the potential to offer higher returns in the long term. Apart from ELSS, no other tax saving options under Section 80C offers such high exposure in equity. Furthermore, ELSS has the shortest lock-in than any other Section 80C options.

Unlike other tax saving options which involve paperwork, ELSS online investment is quick and hassle-free. After investing, you can also easily track your portfolio online. The table below shows a quick comparison between ELSS and other 80C tax saving options-.

Sec 80C Tax Saving Options Returns Safety liquidity
Public Provident Fund (PPF) Market-linked (7.1% for current year) High Lock-in till 5 years
Senior Citizen Saving Scheme (SCSS) 7.4% High Lock-in for 5 years, interest paid quarterly
National Pension Scheme (NPS) Market-linked Moderate No withdrawal before retirement
ELSS Market-linked Moderate Lock-in for 3 years

Benefits of Investing in ELSS

Long-term returns

Since ELSS is an equity scheme, it has the potential to deliver good returns in the long run. As your Capital is locked for three years, there is sufficient time to earn higher returns. Furthermore, ELSS plan is diversified across major Equity Funds, which enables capital appreciation. They have the potential to beat other investment over a long period. Therefore, the long-term returns in ELSS are higher when compared to PPF, NSC and other fixed-Income options.

Lowest lock-in period

ELSS has a very modest lock-in period of three years, whereas, other tax options come with a minimum of five-year lock-in. This brings discipline over investing and enables a good habit to stay invested for a longer duration.

Professionally managed

The investor's money is in safe hands as the investment made in ELSS scheme is professionally managed by fund managers who have knowledge about the functioning of Capital Markets. Fund managers adopt and personalize their Buy and Hold strategies in order to maximize returns. So, even if you are a newbie in the investing world or lack time to track folio on a daily Basis, you can be worry-free and capitalize the returns from equity markets.

Best Axis ELSS Mutual Funds 2022

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2021 (%)
Axis Long Term Equity Fund Growth ₹67.4716
↑ 0.32
₹31,624-28.1-8.811.51124.5
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 1 Dec 22

1. Axis Long Term Equity Fund

To generate income and long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities. However, there can be no assurance that the investment objective of the Scheme will be achieved.

Axis Long Term Equity Fund is a Equity - ELSS fund was launched on 29 Dec 09. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 15.9% since its launch.  Ranked 20 in ELSS category.  Return for 2021 was 24.5% , 2020 was 20.5% and 2019 was 14.8% .

Below is the key information for Axis Long Term Equity Fund

Axis Long Term Equity Fund
Growth
Launch Date 29 Dec 09
NAV (01 Dec 22) ₹67.4716 ↑ 0.32   (0.47 %)
Net Assets (Cr) ₹31,624 on 31 Oct 22
Category Equity - ELSS
AMC Axis Asset Management Company Limited
Rating
Risk Moderately High
Expense Ratio 1.61
Sharpe Ratio -0.75
Information Ratio -0.95
Alpha Ratio -14.78
Min Investment 500
Min SIP Investment 500
Exit Load NIL
Sub Cat. ELSS

Growth of 10,000 investment over the years.

DateValue
30 Nov 17₹10,000
30 Nov 18₹10,582
30 Nov 19₹12,091
30 Nov 20₹13,758
30 Nov 21₹18,299
30 Nov 22₹16,698

Axis Long Term Equity Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹395,578.
Net Profit of ₹95,578
Invest Now

Returns for Axis Long Term Equity Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 1 Dec 22

DurationReturns
1 Month -0.2%
3 Month -2%
6 Month 8.1%
1 Year -8.8%
3 Year 11.5%
5 Year 11%
10 Year
15 Year
Since launch 15.9%
Historical performance (Yearly) on absolute basis
YearReturns
2021 24.5%
2020 20.5%
2019 14.8%
2018 2.7%
2017 37.4%
2016 -0.7%
2015 6.7%
2014 66.2%
2013 16.5%
2012 33.7%
Fund Manager information for Axis Long Term Equity Fund
NameSinceTenure
Jinesh Gopani1 Apr 1111.59 Yr.

Data below for Axis Long Term Equity Fund as on 31 Oct 22

Equity Sector Allocation
SectorValue
Financial Services33.07%
Consumer Defensive15.4%
Basic Materials11.81%
Consumer Cyclical10.31%
Health Care8.24%
Technology8.02%
Communication Services5.3%
Utility4.23%
Industrials2.2%
Asset Allocation
Asset ClassValue
Cash1.42%
Equity98.58%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Bajaj Finance Ltd (Financial Services)
Equity, Since 30 Sep 16 | 500034
10%₹3,054 Cr4,163,339
↓ -228,013
Avenue Supermarts Ltd (Consumer Defensive)
Equity, Since 30 Apr 17 | 540376
10%₹3,038 Cr6,925,446
↑ 48,556
Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 31 May 11 | KOTAKBANK
7%₹2,145 Cr11,789,401
↑ 42,160
Tata Consultancy Services Ltd (Technology)
Equity, Since 30 Apr 17 | TCS
7%₹2,081 Cr6,925,278
↑ 28,492
Nestle India Ltd (Consumer Defensive)
Equity, Since 31 Aug 14 | NESTLEIND
6%₹1,777 Cr928,066
Pidilite Industries Ltd (Basic Materials)
Equity, Since 30 Nov 14 | PIDILITIND
6%₹1,740 Cr6,467,025
↑ 94,318
Info Edge (India) Ltd (Communication Services)
Equity, Since 31 May 14 | NAUKRI
5%₹1,659 Cr4,296,430
Divi's Laboratories Ltd (Healthcare)
Equity, Since 30 Nov 17 | DIVISLAB
5%₹1,539 Cr4,153,756
↑ 290,195
Bajaj Finserv Ltd (Financial Services)
Equity, Since 30 Jun 20 | 532978
5%₹1,510 Cr8,997,890
↑ 4,498,945
Housing Development Finance Corp Ltd (Financial Services)
Equity, Since 31 Jan 10 | HDFC
5%₹1,467 Cr6,413,486
↓ -226,348

How to Invest in ELSS – SIP or Lump Sum?

Systematic Investment Plan (SIP) or Lump sum? This is one question that revolves in the mind of the investors. Both modes have unique advantages; the end decision is based on your personal financial goal.

For instance, if you wish to invest Rs. 1.5 lakh in ELSS, you can either invest all at once (lump-sum) or do a SIP every month to keep your investments in a disciplined manner.

Benefits of Systematic Investment Plan

  • As you invest gradually via a SIP, your investments are spread over time. It lowers the market risk, as only a small part of investment faces market volatility.

  • SIP allows investment with an amount as low as Rs. 500 monthly. A salaried person or new investor can feel more comfortable opting SIP as they are only able to invest small, but fixed sum on a regular basis for long-term. It also helps in disciplined investing.

  • One of the major benefits SIP offers is the Rupee Cost Averaging. When the market is low, the fund manager purchases more units to reduce the per-unit cost of investment. These units are later sold when the market reaches its peak, which ensures higher returns.

Benefits of Lump Sum

  • A lump-sum mode is a good option for yearly revenues. You may consider investing all at once as there won't be any Financial Distress of investing monthly.

  • Investing lump sum at the start of the financial year allows your money to earn higher returns because of the long-term goal.

Conclusion

An early start gives you enough time to evaluate all the tax-saving options. There is enough time to plan your tax savings in a staggered manner. On the other hand, last-minute preparations can turn out to be catastrophic, resulting in improper planning.

Say good-bye to last-minute rush! Plan your taxes in advance with ease.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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