Buyers prepared to put money into the Nationwide Pension System (NPS) can’t wait until March 31 to make their contributions – to avail the extra tax advantages as much as Rs 50,000 over and above the 80C restrict of Rs 1.5 lakh on voluntary contribution to the NPS Tier 1 Account – because it takes a while for the cash to get really credited to the account of NPS fund supervisor.
Because of the time lag between making a contribution and getting it credited within the respective fund accounts, the NPS subscribers, depositing contributions by way of a cheque, must contribute by twenty fifth of the month throughout which the contribution deadline ends, whereas in case of on-line contribution, it’s higher to do it by twenty seventh or twenty eighth, relying on the variety of working days accessible throughout the interval.
Alternatively, traders prepared to put money into Fairness Linked Financial savings Scheme (ELSS) – to get tax advantages as much as Rs 1.5 lakh u/s 80C of the Earnings Tax Act, have been ready to take action even on March 31 earlier than 3 pm until final yr, offered the final day of the monetary yr was a working day.
Because the NAV applicability for mutual fund (MF) investments has moved to realisation primarily based NAV from February 1, 2021, even for investments beneath Rs 2 lakh, there shall be a while lag between investing and the funding cash getting credited within the respective ELSS fund accounts.
Consequently, even when a cheque of Rs 1.5 lakh is deposited earlier than 3 pm, the models shall be allotted on the day the funding cash is credited within the fund account earlier than 3 pm or on the following day in case it’s realised after 3 pm. The allotment of the models shall be made on the NAV of the date of allotment.
So, like NPS, for ELSS additionally, traders have to take a position early to make sure that the funding quantity will get credited within the funds account on or earlier than the March 31 deadline ends.
Furthermore, as March 29, 2021 is a vacation in respect of pageant Holi, traders, who’re planning to submit MICR cheques which might be topic to clearance, might witness additional delays in processing because the banks shall be closed on the 4th Saturday on March 27, 2021.
So, to make sure that they get the tax advantages on ELSS investments for the monetary yr 2020-21, traders must submit the appliance type as early as doable as there are possibilities of the potential delays as a result of cost realisation.
However by which date do you have to deposit your ELSS software and the cheque to get the tax profit?
Based on the Operations Staff of Mirae Asset Mutual Fund, transactions put up March 25, 2021 might face these points.