Investment Planning for 80 C Deductions

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CA Sanjay Baheti (Querist)
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31 January 2011 Dear Members,

What is difference between ELSS & ULIP from tax planning point of view & whichever is more benificial to the clients from the best Return as well as risk coverage point of view.

Regards

B. Gopalkrishna Baliga

B. Gopalkrishna Baliga (Expert)
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31 January 2011 ELSS is the Equity Linked Saving Scheme offered by Fund houses. in the ELSS scheme, fund houses invest the funds in Equity Shares of companies and the funds are locked in for 3 years. it can either be invested lumpsum or via SIP mode. In SIP mode, every instalment invested is locked in for three years. Since it is invested in equity, in long run, ELSS may prove to be most profitable instruments. So, it can be said that ELSS provide you with double benefit of tax saving as well as return giving investments in an investment span of 3-5 years

On the other hand, ULIP is Unit Linked Insurance Plan which is the insurance plan where the insurer invests your funds in equity shares. It can be said that ULIP is the combination of insurance and mutual fund. However, ULIP scheme deducts comparatively higher administrative and other charges every year from your premium resulting in reduction in units which you get. ULIP should be taken only if the investment plan is for 15+ years.