As the financial year approaches its end, investors find themselves at a crucial juncture now of the looming deadline for tax-saving investments, especially in Equity Linked Savings Scheme (ELSS) mutual funds. However, amid the flurry of financial activities, confusion arises regarding the last date for investments due to the coinciding market closures and banking holidays.
ELSS Deadline
Although, March 31st is marked as the final day for tax-saving investments. However, this year presents a unique challenge as it falls on a Sunday, leaving investors scrambling to secure their financial plans.
Market and Banking Holidays
Compounding the issue, financial markets will be closed on Friday, March 29th, in observance of Good Friday, followed by the weekend closure on March 30-31. With banks closed on Good Friday and the subsequent weekend, investors face a limited window for transactions.
However, bank will remain open this Saturday, March 30, 2024, as it marks the fifth Saturday of the month.
Impact on ELSS Investments
ELSS investments, renowned for their tax-saving benefits under Section 80C, rely on timely transactions within the market's operational hours. While online transactions may promptly debit funds from investors' accounts, the actual allocation of units occurs when the stock market is open.
However, it is important to note that the investors should finalise ELSS investments at least 2-3 days before the market's last working day to ensure eligibility for tax benefits. Sebi guidelines emphasise the importance of funds reaching mutual fund accounts before 3 PM on market days for same-day NAV.
What is ELSS mutual fund?
ELSS means Equity Linked Savings Scheme. It is a type of mutual fund scheme that primarily invests in equity and equity-related instruments. ELSS mutual funds offer investors the dual benefit of potential capital appreciation from investing in the stock market along with tax savings under Section 80C of the Income Tax Act in India.
ELSS funds come with a lock-in period of three years, during which investors cannot redeem their investments. ELSS funds are known for their potential to generate higher returns over the long term compared to other tax-saving investment options like Public Provident Fund (PPF) or National Savings Certificate (NSC).
