Lux Investing
Can Dividend reinvestment in elss qualify for tax rebate?
I have invested some amount in elss(equity linked savings scheme) under dividend reinvestment option. I also received dividend 2 times during this financial year. Since this reinvestment is going to be in lock period of 3 yrs. can claim tax rebate for this amount?
Public Comments
- If you opt for the dividend re-investment plan under an ELSS, you are entitled to deduction under Section 80C of the Income Tax Act, in the year of reinvestment, provided it falls within your overall investment limit of Rs 1 lakh. The dividend, which is automatically reinvested by your fund, amounts to your subscribing for additional units and thus qualifies for fresh deduction. But you need to keep in mind that in an ELSS, a dividend reinvestment would mean locking the fresh amount for another three years from the date of such a receipt. So, if you are looking to cash out on the principal that is already locked in for three years, then it is best to opt for dividend payout.
