Tax-Saving Funds

Also known as ELSS or equity-linked savings schemes, these funds offer benefits under Section 88 of the Income-Tax Act. So, on an investment of upto Rs.10,000 a year in an ELSS, you can claim a tax exception of20 percent from your taxable income. You can invest more than Rs.10,000, but you can invest more than Rs.10,000, but you won’t get the Section 88 benefits for the amount in excess of Rs. 10,000. The only drawback to ELSS is that you are locked into the scheme for three years.