Investors prepared to invest in the National Pension System (NPS) can not wait till March 31 to make their contributions – to avail the added tax positive aspects up to Rs 50,000 more than and above the 80C limit of Rs 1.5 lakh on voluntary contribution to the NPS Tier 1 Account – as it requires some time for the income to get essentially credited to the account of NPS fund manager.
Due to the time lag among creating a contribution and acquiring it credited in the respective fund accounts, the NPS subscribers, depositing contributions via a cheque, require to contribute by 25th of the month throughout which the contribution deadline ends, even though in case of on the net contribution, it is much better to do it by 27th or 28th, based on the quantity of working days offered inside the period.
On the other hand, investors prepared to invest in Equity Linked Savings Scheme (ELSS) – to get tax positive aspects up to Rs 1.5 lakh u/s 80C of the Income Tax Act, had been in a position to do so even on March 31 prior to 3 pm till final year, supplied the final day of the economic year was a working day.
As the NAV applicability for mutual fund (MF) investments has moved to realisation based NAV from February 1, 2021, even for investments beneath Rs 2 lakh, there will be some time lag among creating an investment and the investment income acquiring credited in the respective ELSS fund accounts.
As a outcome, even if a cheque of Rs 1.5 lakh is deposited prior to 3 pm, the units will be allotted on the day the investment income is credited in the fund account prior to 3 pm or on the next day in case it is realised immediately after 3 pm. The allotment of the units will be produced at the NAV of the date of allotment.
Mutual Fund Investment: You may possibly not get MF units at preferred NAV even if applied prior to reduce off time
So, like NPS, for ELSS also, investors have to invest early to assure that the investment quantity gets credited in the funds account on or prior to the March 31 deadline ends.
Moreover, as March 29, 2021 is a vacation in respect of festival Holi, investors, who are arranging to submit MICR cheques that are topic to clearance, may possibly witness additional delays in processing as the banks will be closed on the 4th Saturday on March 27, 2021.
So, to assure that they get the tax positive aspects on ELSS investments for the economic year 2020-21, investors require to submit the application kind as early as attainable as there are probabilities of the prospective delays due to payment realisation.
But by which date need to you deposit your ELSS application and the cheque to get the tax advantage?
According to the Operations Team of Mirae Asset Mutual Fund, transactions post March 25, 2021 may possibly face these difficulties.