Bank of India ELSS Tax Saver Regular Growth Plan

The Bank of India ELSS Tax Saver offers an Equity Linked Saving Scheme (ELSS) for investors seeking long-term capital appreciation and the tax benefit available under Section 80C.

The Bank of India ELSS tax saver plan growth option, therefore, can attract investors who want to maintain their investment for long term investment growth instead of regular returns.

What Is Bank of India ELSS Tax Saver?

Bank of India Mutual Fund offers this scheme as an open-ended Equity Linked Savings Scheme (ELSS).

Understanding ELSS Mutual Funds

ELSS is Equity Linked Savings Scheme. These are Mutual funds that primarily invest in equities, and are eligible for a statutory three-year lock-in period.

Bank of India ELSS Tax Saver Regular Plan Growth

If the investor wants to keep the value of his investment invested in the ELSS plan instead of making regular IDCW receipts, the Bank of India ELSS tax saver plan growth option is of relevance.

In a Growth option, the investment value reflects the returns instead of paying them out as regular income.

What Does Regular Plan Growth Mean?

A Regular Plan includes distribution-related expenses and generally uses intermediaries or distributors to sell the plan.The Growth option, on the other hand, is about growth and not on periodic IDCW distributions.

Hence, it is essential to know that when searching for Bank of India ELSS tax saver plan growth, Regular and Growth are two different aspects of the investment:

Regular Plan relates to the plan structure.
Growth Option relates to how returns are handled.

How Growth Option Works

Assume that you buy an investment in a Growth option, and the value of the underlying portfolio increases over time. The investment value may incorporate the appreciation as the NAV instead of periodic IDCW payments.

It’s sort of like you’re not taking the profit out of the business with the money. The funds remain invested, allowing compounding to potentially grow the investment over a longer period.

But of course, depending on the market performance, the actual result will be different. Mutual funds are not guaranteed to give returns.

Key Features of Bank of India ELSS Tax Saver

It’s important to do some homework before spending any money, and the fund’s name may be part of it. Some of the key points about the scheme are given below.

Three-Year Statutory Lock-In

The scheme has a statutory lock in period of 3 years. One of the prominent features of ELSS funds is that they are considered to be more volatile. Volatility is one of the most distinguishing properties of ELSS funds.

The Lock-in for each investment. For investors who invest via SIP, each of the SIP has a lock in period of three years.

This is crucial because ELSS investments do not allow you to withdraw the entire investment at any time like a savings account does.

Equity-Focused Investment Strategy

The scheme mainly invests in equity and equity-related securities across all market capitalizations. It has an investment objective that is long-term capital growth.

This equity exposure carries the possibility of greater long-term growth, but also a significant amount of market risk.

Tax-Saving Benefit Under Section 80C

The old tax regime provides Section 80C deduction based on investments in ELSS, as per the rules and limits.

Just keep in mind, however, that tax advantages cannot be the only consideration. Even a tax-saving product must meet your investment objectives, risk tolerance and time horizon.

No Entry Load and Exit Load

On the official Bank of India Mutual Fund product page the exit load and nil entry loads and nil exit loads for both. Investments in ELSS continue to be subject to three year statutory lock-in.

Who Should Consider Bank of India ELSS Tax Saver?

If you have the following tax savings in mind, this scheme might be worth considering:

Possess a long time horizon.
Know how to deal with fluctuations in the stock market.
Desire to understand the tax planning with ELSS under the Old tax regime.
Is willing to lock in for three years.
Desire to be exposed to companies of all market capitalizations.
Choose Growth for long-term investment growth.
Learn that there is no guaranteed return and return is market-related.

Advantages of Bank of India ELSS Tax Saver

This scheme may have some benefits to offer the investor:

Potential Tax Benefit

Section 80C deductions (depending on rules and limits) are available for eligible investments under the old tax regime.

Long-Term Wealth Creation Potential

The scheme mainly focuses on equity investments, offering the potential for long-term capital appreciation.

Diversified Equity Exposure

The portfolio may be diversified by company, by sector and by market-cap.

Shorter Lock-In Compared with Some Traditional Options

The three-year lock-in period of ELSS is relatively short as compared to some of the traditional tax saving investments.

Growth Option

The Growth option is an option that enables an investor to concentrate on building their investment, instead of receiving periodic IDCW payouts.

Is Bank of India ELSS Tax Saver Suitable for Long-Term Investors?

Investors who understand the risks of equity investing and want diversified equity exposure for long-term investment can consider the Bank of India ELSS Tax Saver Plan Growth option for fund as part of their overall financial plan.

The scheme was in operation for many years, the Allotment date being February 25, 2009. It investment goal is to grow long term and it can invest in companies that range in size.

But suitability is dependent on the particular investor.

For a young investor with a long-term outlook and high tolerance for risk, market corrections might be an opportunity to stick with the investment. People who are moving toward a big financial objective might require a more prudent strategy.

There is no one best mutual fund. The key to selecting the right fund is to determine what it is you are trying to achieve in the context of your financial goal, risk tolerance, tax status, and time horizon.

Conclusion

This scheme is a combination of investing in equity and the existing tax benefits under the old tax regime, as per the applicable Section 80C of the Income Tax Act, 1961.

The Bank of India ELSS tax saver plan growth option might be useful to those who prefer to have their investment returns grow instead of receiving them as IDCW periodically.

FAQs

1. What is Bank of India ELSS Tax Saver?

Ans) This is an open-ended equity linked savings plan which primarily invests in equity and equity related securities.

2. What is the lock-in period of Bank of India ELSS Tax Saver?

Ans) The scheme has a three year statutory lock-in period and each SIP installation has its own lock-in period.

3. Does Bank of India ELSS Tax Saver offer a tax benefit?

Ans) Investors may claim a Section 80C deduction for qualifying investments under the old tax regime, provided they follow the applicable rules and limits.

4. What is Bank of India ELSS Tax Saver Plan Growth?

Ans) The Bank of India ELSS tax saver plan growth means that the growth options are those in which returns are not withdrawn as periodic IDCW and continue to grow in the plan.

5. Is Bank of India ELSS Tax Saver suitable for beginners?

Ans) It works well for people with a longer-term investment time frame and an understanding of equity risk who can hold onto the investment through market ups and downs.