Four Ways to Get Much More than Tax Savings with Birla Sun Life Tax Relief 96'

Is your tax saving investment actually taxing you? That’s right. Every year, most investors in India invest in saving investments for tax deductions. In the rush to save taxes, many of them end up making investments which actually tax them. If you are surprised to hear that, just read on.

How tax-saving investments can actually tax you Most tax saving investments only provide tax deduction for the investment amount provided you have not exhausted the tax deduction limit. At the same time, returns from many of these investments maybe taxable as is the case with other traditional tax-saving instruments. In other cases, the maturity amount is taxable. Take the debt variant of National Pension Scheme (NPS) where you pay long term capital gains tax of 20% with inflation indexation benefits.
Of course, there is the “invisible tax” of inflation which people mostly ignore.In the last 10 years, the average annual retail inflation rate has been about 8.51%*. Return after tax from fixed income investments typically trail inflation rate. In effect, inflation is like an invisible tax on your investments.
Clearly, you need your tax-saving investments to help you from the tax hit at the three stages of contribution, returns and maturity, even as it grows well to stay ahead of inflation. Birla Sun Life Tax Relief’96 is an open ended equity linked savings scheme (ELSS) with the objective of long termgrowth of capital through a portfolio with a target allocation of 80% equity, 20% debt and money market securities which checks most of the boxes for a good tax saving investment.
Being an equity linked savings scheme (ELSS) from a mutual fund, it invests the money pooled from investors in equities and offers annual tax deductions of upto Rs 1.5 lakh under Section 80C with three years lock in period. Apart from this benefit,it provides four compelling benefits as below:

  • 1) Get potential growth from equities Historically, equities haveprovided the one of the best returns compared to other asset classes like debt. That’s when you remain invested for long term, say, 8-10 years or more. This makes it very helpful to save ample amount for major financial goals such as child’s higher education and retirement. If you are investing in an equity-based tax saving investment like ELSS, all you need to do is earmark your tax saving investment for a particular goal.
    Birla Sun Life Mutual Fund offers Birla Sun Life Tax Relief’ 96, an open ended ELSS scheme whichprovides as a tax saving investment with a lock in period of 3 years. This is one of the oldest schemes in the ELSS fraternity. And, it has also rewarded investors. Since its inception in 06 March 2008, the fund has delivered 10.82 ## per cent compounded annualised returns. This means if you had invested Rs 10,000 in March 2008, your money would have grown to Rs 24,130 today.

  • 2) Tax free returns ELSS invest in equities and therefore enjoy the same tax treatment as them. In taxation of equity investmentsolder than one year, the capital gains is treated as long term capital gains and the tax on them i.e. long term capital gains tax, is nil. Since the ELSS has a mandatory lock-in period of three years, the tax liability on the return is nil.In case of investment in Birla Sun Life Tax Relief’ 96 an open ended equity linked savings scheme, it adds yet another advantage to its performance track record.

  • 3) Shorter lock-in,higher liquidity Investments under Section 80C have a mandatory lock-in period of various time periods. While one should stay invested for the long term in equity funds like the ELSS, however, there could be many reasons, like financial emergencies which might require liquidation after the lock-in period. Since ELSS has one of the shortest lock-in periods among tax saving investments, it helps you in such situations. The money is credited to the bank account in less than T+three business days.

  • 4) Regular income from dividend option subject to the availability of surplus if any Unlike any other investment under Section 80C, ELSS offers both dividend and growth option. You can choose from these two options depending on your financial needs. If you don’t anticipate any need for income for a long time, you can opt for the growth option.

At the same time, if you would like some form of liquidity or income, you can opt for dividend option. Remember, dividend is tax free in the hand of investors.It is here Birla Sun Life Tax Relief 96 scores big. In the last 16 years, the fund has given Rs 240.37 per unit as dividend to its investors. Since 13 March 2015, the fund has given Rs.15.87 ## as dividend.
By now, it would be clear to you that your tax investments can and should provide you much more than some tax relief in current tax assessment year. When used smartly, an ELSS can help your finances and future in many ways.You don’t make any compromises when it comes to getting value for money, why should it be any different for tax saving investments?

For further details on the scheme, investors can refer to Scheme Information Document and KeyInformation Memorandum on the website of the Fund. &
* Average annual inflation in CPI IW 2006-2015
## As per past performance, please Click here to know more
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Tax saving of Rs. 53,303 is calculated assuming qualifying amount of deduction is Rs. 1.50 Lakh and the investor falls in the top income slab of 30% and includes the applicable cess. 12% surcharge is also taken into account which is applicable if the income of the investor is over Rs. 1 Crore.
Investors are advised to consult their tax advisor in view of individual nature of tax benefits. Investors are requested to note that fiscal laws may change from time to time and there can be no guarantee that the current tax position may continue in the future.
Note: The comparison of ELSS Vs other traditional savings instruments has been given for the purpose of the general information only. Investment in ELSS carry higher risk, does not guarantee returns and any investment decision needs to be taken only after consulting the Tax Consultant or Financial Advisor. Birla Sun Life Mutual Fund / Birla Sun Life Asset Management Company Limited will not accept any liability/ responsibility/loss incurred on any investment decision taken on the basis of this information.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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