I want to start a SIP to save tax for the long run. Please suggest a fund to invest.
Suresh Ranjan, Jodhpur
Equity linked savings scheme (ELSS) are mutual funds in which you can invest to save tax under Section 80C of the income tax up to Rs 1.5 lakh in a financial year. However, investing in ELSS has a three year lock-in on the investment to qualify for tax deductions under Section80C. On completion of the lock-in; the units redeemed are tax free. However, we suggest instead of a SIP, in case of tax planning funds you should look at investing lump sums at different times to stagger your investments. This staggered investment is done to have different three year lock-ins every time you invest instead of each monthly SIP staying invested for three years to get qualified for the tax benefits. You could consider investing in Axis Long-Term equity, Franklin India Taxshield or DSPBR Tax Saver.
