How to Invest in ELSS Funds Online?
ELSS (Equity Linked Savings Scheme) funds are among the most popular mutual categories amongst the retail investors for investing in open-ended equity funds, as reflected by the number of investor folios. As of 30th June 2020, ELSS funds are present in 1.24 crore investor folios out the total 6.73 crore investor folios in equity-oriented schemes. The aggregate Assets Under Management (AUM) of Rs. 90,024 crores are in the ELSS category funds. Source: Association of Mutual Funds in India – AMFI
One of the significant reasons for the popularity of ELSS funds is the tax benefits and the potential of long-term wealth creation. As a Covid-19 relief measure, the taxpayers have been allowed to invest in ELSS funds until 31st July 2020 and still claim such investments towards tax deduction for FY 2019-20. The regular investment period would have otherwise ended on 31st March 2020.
One may adopt different ways to invest in ELSS, including lumpsum investment and Systematic Investment Plan (SIP). The process to buy ELSS mutual funds online is detailed below:
Visit the Website
The investor must visit the mutual fund house's website where he/ she wants to invest for tax-saving purposes. The website may have a link/ button to proceed with the investment transaction, like 'Invest with Us', 'Make a Transaction,' Invest Now' etc.
KYC Compliance Validation
Once the investor initiates the investment process, the next step is to input the 10-digit PAN (Permanent Account Number). This helps the portal validate the investor status and check if the investor has undertaken KYC compliance. An investor cannot proceed with the investment process without KYC compliance.
KYC Compliance Process
If one is already an existing investor and has undertaken KYC compliance even with any other mutual fund house, the status will be shown as KYC compliant. However, if the investor is investing for the first time, he/ she will be required to provide necessary documents to be KYC compliant. The investor can continue with the investment transaction once the KYC process has been completed.
Details of the Investment
The transaction portal will seek the investment details, namely, name of the scheme, dividend/ growth option, amount of investment, mode of investments, bank details, nominee details, etc. Further, if the investor has opted for SIP registration, one must also provide further information like the number of SIP instalments, the SIP date, amount, periodicity, etc.
Payment for the Investment Transaction
Once the investor enters the necessary details, the portal will then redirect the investor to the payment gateway for making the payment. Once the payment has been successfully made, a transaction acknowledgment will also be displayed on the screen. Such confirmation will also be sent to the e-mail address as provided by the investor.
Further, if the investor has opted for SIP registration, a SIP Registration Reference Number will also be shared, which will help the mutual fund to identify the SIP. If the investment has been made in lumpsum, the process completes at this step. However, SIP registration will also call for another step to be undertaken by the investors.
SIP Registration with Bank
The investor needs to give a mandate to his/ her bank for making payment for the regular instalments. This can be undertaken through the Bill Pay option provided by different banks. For this, the investor must log in to the Net Banking portal of the bank and register the SIP for regular bill payments through the SIP Registration Reference Number provided by the mutual fund while confirming the SIP registration.
Once the SIP has been registered with the bank, the investor may also set up auto-bill payment for such SIP. This helps investors automate the SIP payment process. The amount will be automatically deducted from the bank account and invested in the mutual fund scheme as per the SIP so registered.
The mutual fund generally shares the statement for the investment transaction within 1-2 working days, which also serves as sufficient proof for claiming tax benefit towards investment in ELSS funds. With the above steps to invest in ELSS funds online, one can conveniently save taxes while making investments with a click of the mouse without physically visiting any office.
Disclaimers: The information set out above is included for general information purposes only and is not exhaustive and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, each investor is advised to consult his or her or their own tax consultant with respect to specific tax implications arising out of their participation in the Scheme. Income Tax benefits to the mutual fund & to the unit holder is in accordance with the prevailing tax laws/finance bill 2020. Any action taken by you on the basis of the information contained herein is not intended as on offer or solicitation for the purchase and sales of any schemes of UTI mutual Fund. Please read the full details provided in SID and SIA carefully before taking any decision.
UTI AMC Ltd is not an investment adviser, and is not purporting to provide you with investment, legal or tax advice. UTI AMC Ltd or UTI Mutual Fund (acting through UTI Trustee Company Pvt. Ltd) accepts no liability and will not be liable for any loss or damage arising directly or indirectly (including special, incidental or consequential loss or damage) from your use of this document, howsoever arising, and including any loss, damage or expense arising from, but not limited to, any defect, error, imperfection, fault, mistake or inaccuracy with this document, its contents or associated services, or due to any unavailability of the document or any part thereof or any contents or associated services.