Is SIP Tax Free? How to Start SIP To Save Tax on Your Income? and Can SIP Investments Save Tax? Benefits, Rules and How It Works · Content Duplication Tool

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Tax Benefits of SIP Investments

ELSS investments also come with a lock-in period of 3 years, and for SIPs, each instalment has its own 3-year lock-in from the date of investment, providing both tax savings and potential for long-term capital appreciation. This makes SIPs an attractive option for tax-conscious investors. In addition, there’s an exemption under which long-term capital gains tax is not applicable if the gains are less than ₹1.25 lakh per financial year (under Section 112A; gains above this are taxed at applicable LTCG rates).

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Higher Liquidity

Investing in SIP extends the highest liquidity amongst all investment options that grant an exemption under section 80C of the Indian Income Tax, 1961. Since this SIP (ELSS) holds a lock-in period of only three years, you can readily redeem your investments either fully or partially so that you never fall short of liquidity. However, you must note that these funds are locked-in for a period of 3 years and you cannot use the funds during this tenure for paying your taxes.

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Tax Benefits of SIP Investments

Higher Liquidity