Tata Tax Saver Fund

Investment Objective of Tata Tax Saver Mutual Fund

The investment objective of Tata ELSS Mutual Funds is to provide investors with an opportunity to grow wealth over the long run by investing in equities and related instruments of various sectors and industries. The funds also offer tax benefits under Section 80C of the Income Tax Act, as they have a lock-in period of three years. The funds aim to capture the long-term upside potential of the Indian equity market by following a certain investment strategy and objective.

Risks Involved in Tata Tax Saver Fund

Like any investment scheme, Tata ELSS Mutual Fund carries certain risks that investors should be aware of before investing. Some of the risks involved in Tata ELSS Mutual Funds are:

• Market risk: This is the risk of losing money due to fluctuations in stock market prices.
• Liquidity risk: This is the risk of not being able to sell or redeem the fund units when needed.
• Concentration risk: This is the risk of investing too much in a particular sector or industry that may underperform or face regulatory issues.
• Scheme risk: This is the risk of investing in a fund that may not perform well due to various factors such as the fund manager’s decisions, expenses, portfolio turnover, etc.

Return Potential of Tata ELSS Mutual Fund

The return potential of Tata ELSS Mutual Funds depends on the performance of the equity market and the fund manager’s strategy. Historically, ELSS funds have delivered average returns of around 12%-15% over a period of more than five years. However, Tata ELSS funds do not guarantee assured returns, and the fund performance may vary from one period to another.

Investing in Tata ELSS Mutual Funds provides you with returns by way of capital appreciation and regular dividends. Capital appreciation results from the increase in the underlying stock prices over a given investment horizon. Regular dividends are the payouts made by the fund from its profits to its investors. However, both capital appreciation and dividends are subject to market fluctuations and taxation.

Who Should Invest in Tata ELSS Mutual Funds?

Tata ELSS Mutual Funds are suitable for investors who:

• Have a higher risk appetite and are willing to invest in equity and equity-related instruments.
• Wants to avail of tax benefits under Section 80C of the Income Tax Act and claim a deduction of up to Rs 1.5 lakh on their investment
• They can commit to a three-year lock-in period and manage their liquidity needs accordingly.
• Have a long-term investment horizon of more than five years and want to benefit from the compounding effect and the long-term upside potential of the Indian equity market.
• Have long-term goals such as children’s education, retirement planning, or buying a home.

Things To Consider Before Investing in Tata ELSS Mutual Funds

Here are some points to consider before investing in Tata ELSS Mutual Funds:

• Portfolio composition: Check the underlying theme and strategy of the fund and see if it matches your risk profile and investment objective.
• Expense ratio: Compare the expense ratio of different Tata ELSS funds and choose the one that offers the best value for money.
• Lock-in period: Tata ELSS funds have a mandatory lock-in period of three years, which means you cannot withdraw your money before that.
• Consistency of returns: You should check the past performance of the fund during different market conditions and see how consistent it has been in delivering returns. You should also compare the fund’s performance with its benchmark and peers to assess its relative performance.
• Taxation: Make sure to check the tax implications of investing in Tata ELSS mutual funds as well.

Tax on Tata ELSS Mutual Funds

Tata ELSS Mutual Funds have a lock-in period of three years and offer tax benefits under Section 80C of the Income Tax Act. You can claim a tax deduction of up to Rs 1.5 lakh on the amount invested in Tata ELSS Mutual Funds. This reduces your taxable income and your overall tax liability. The returns from Tata ELSS Mutual Funds are subject to long-term capital gains (LTCG) tax. The LTCG of up to Rs 1 lakh per year is exempt from income tax. The LTCG above Rs 1 lakh is taxed at 10%. This is lower than the maximum marginal tax rate of 30% that applies to other income sources.