ELSS best bet to save taxes via equities

The start of a new financial year is the best time to start planning for investments that reduce the total taxes you pay at the end of the year, that is in next March. By starting early, you can have a full year to execute the plan that will also be easy on your pocket. It's the late starters who have to stretch their family budgets during the last few months to meet their tax-saving investment obligations.
Financial planners and advisers say that if you settle for a round-the-year execution process for saving taxes, that would inculcate a habit of discipline in your investments.On the contrary, if you rush with your tax-saving investments in the month of March for that particular financial year, chances are high that such decisions will go wrong since you will be in a rush to meet the March 31 deadline.
Here are some easy to follow methods for a stress-free investing to save on your taxes:
Take a SIP of ELSS
One of the best tax-saving instruments is the equity-linked savings schemes (ELSSs) from mutual fund (MF) houses.ELSSs are those MF schemes that are approved by the government for saving taxes. By investing in these schemes, you can claim tax benefits under section 80C of the Income Tax Act. Although you can invest a lump sum in one or more ELSSs to save on taxes, financial planners and top officials at fund houses say the best way is to invest in these schemes through the year. “In every ELSS, one can settle for a systematic investment plan (SIP). Also, for ease of investing, one should opt for the ECS (electronic clearing service) mandate through a bank account so that every month a fixed sum of money is deducted from the account and invested in the plan,“ a top official at a domestic mutual fund said.
To invest in an ELSS, you need to fill up the requisite forms from a fund house, along with the form for SIP mode of investing. You also need to give a mandate to your bank for ECS. Once all these forms -along with the Know Your Customer (KYC) form -are in place, your investments in the ELSS selected by you should start and continue without any problem.
There are some additional advantages of an SIP investment. Such a method will allow you to reap the benefits of rupee-cost averaging. This is a process where you buy more units of the ELSS when its price is low, but less number of units when unit prices are high. In the process, over several months, this process will average out your cost of acquisition. In comparison, if you invest lump sum, you may not get the best price to invest in the scheme.
Another option -although limited to very people now -is the Rajiv Gandhi Equity Savings Scheme (RGESS). For this scheme, too, you can opt for an SIP route of investing and enjoy the tax benefits.
Save up for a term plan
According to financial planners and advisers, a salaried person covered under the employees provident fund (EPF) scheme should find out how much heshe is contributing in that scheme. Then the next step is to buy a term plan.
Now let's consider that the annual premium you pay for the term plan is Rs 20,000. In that case, you can set up an SIP in a short-ter m debt plan and contribute about Rs 1,700 every month. In this way at the end of the year you have a little over Rs 20,000, which can be used for paying your premium for the term plan. This premium is tax deductible under section 80C of the I-T act.
Consider PPF
People who are not covered under the EPF scheme should start investing in a public provident fund (PPF). But before starting a PPF ac count, you should decide if you are ready to invest for 15 years with most of the corpus being locked in for this long period. PPF investments of up to Rs 1.5 lakh per annum can also be used for tax de ductions under section 80C of the I-T act. Some banks have started a process under which they al low their customers to invest in PPF every month after making a one-time mandate.
If you are investing in PPF through this route or through monthly cheques, make sure you invest by the 5th of every month to get the full interest in your account.