Looking to invest in Equity Linked Saving Scheme (ELSS) to avail tax benefits of up to Rs 1.5 lakh under Section 80C for the financial year 2022-23? Well, you shouldn’t wait for the last moment and do it as soon as possible. The key answer being —realizing funds and unit allocation from the bank or AMC's end may or may not take some time, depending on possible KYC issues, bank holidays, and so on.
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Assuming a customer is making a one-time investment, experts say that they can do so even on March 31 in any financial year before the cut-off, and it is included in the current financial year. However, it's better to be proactive rather than making last-minute choices.
When the financial year-end approaches, there are already other receipts that individuals have to scramble for: rent receipts, petrol bills, loan statements, and so on. Along with that, when they have to make a quick decision about tax-saving investments, first-time mutual fund investors may find the process of KYC and account opening a hassle. Alternatively, there could be a delay in receiving the investment proof due to an unexpected bank or payment issues, thereby letting investors potentially miss the ELSS opportunity.
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Additionally, deciding at the last minute can lead to choosing an ELSS fund that is most convenient rather than reviewing and picking one that is a consistent performer. Starting early also means putting the money to work sooner and one can end up utilising time more efficiently, thus not only saving taxes but also growing wealth.
It must be understood that investing is a crucial decision and with time on the side investors can make better decisions.
It is advisable to follow the Systematic Investment Plan (SIP) route while investing in ELSS since it is a more disciplined approach. Starting early also gives the advantage of using SIP which reduces the cash outflow burden that an investor would otherwise face when doing a last-minute investment.
In case of lump sum investments, investing at opportune market falls should be considered rather than impulsive investments, experts say.
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