What are Tax Saving Mutual Funds?

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What are Tax Saving Mutual Funds?

Tax saving mutual funds are just like any other mutual funds with the added bonus that investments made in them are eligible for tax benefits under section 80C. Most of the tax saving mutual funds are ELSS schemes and make investments in equity markets.
Benefits of Tax Saving Mutual Funds
There are lots of benefits to be gain from investing in a tax saving mutual fund. These are some of them:
  1. Investments are eligible for tax benefits up to Rs. 1.5 lakh.
  2. Long term capital gains are not taxed.
  3. These plans allow investors to invest on a monthly basis via an SIP
  4. The portfolios are kept diverse so as to minimize the risk of massive losses.
  5. If you choose not to withdraw the investment, it will continue to grow and turn into savings for a rainy day.
  6. While you may not be able to withdraw the principal, you can withdraw the dividends earned, even during the lock-in period.
  7. These mutual funds tend to offers only 3 years of a lock in period.
  8. Open ended – investments in these can be made all year around.
  9. The particular fund that an investor invests in is run by a qualified funds manager.
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