Not only NPS, here’s why you can’t wait till March 31 to invest in ELSS too

by Joseph K. Clark

The NAV applicability for mutual fund (MF) investments has moved to realization-based NAV from February 1, 2021. Investors willing to invest in the National Pension System (NPS) can’t wait till March 31 to make their contributions – to avail of the additional tax benefits up to Rs 50,000 over and above the 80C limit of Rs 1.5 lakh on voluntary contribution to the NPS Tier 1 Account – as it takes some time for the money to get credited to the account of NPS fund manager.

Due to the time lag between making a contribution and getting it credited to the respective fund accounts, the NPS subscribers depositing contributions through a cheque must contribute by the 25th of the month, during which the contribution deadline ends. In contrast, it is better to make online donations by the 27th or 28th, depending on the number of working days available.

On the other hand, investors willing to invest in the Equity Linked Savings Scheme (ELSS) – to get tax benefits up to Rs 1.5 lakh u/s 80C of the Income Tax Act were able to do so even on March 31 before 3 pm till last year, provided the previous day of the financial year was a working day. As the NAV applicability for mutual fund (MF) investments have moved to realization-based NAV from February 1, 2021, even for investments below Rs 2 lakh, there will be some time lag between making an investment and the investment money getting credited in the respective ELSS fund accounts.


As a result, even if a cheque of Rs 1.5 lakh is deposited before 3 pm, the units will be allotted on the day the investment money is credited to the fund acct before 3 pm or on the next day in case it’s realized after 3 pm. The allotment of the units will be made at the NAV of the date of issuance.

Mutual Fund Investment: You may not get MF units at desired NAV even if applied before cut off time

So, like NPS, investors also have to invest early for ELSS to ensure that the investment amount gets credited itothe funds account on or before the March 31 deadline ends. Moreover, as of March 29, 2021, it is a holiday in respect of the festival Holi; investors, who are planning to submit MICR cheques that are subject to clearance, may witness further delays in processing as the banks will be closed on the 4th Saturday of March 27, 2021. So, to ensure that they get the tax benefits on ELSS investments for the financial year 2020-21, investorsmusto submit the application form as early as possible,e as there are chances of potential delays due to payment realization.

But by wwhenshould you deposit your ELSS application and the cheque to get the tax benefit?

According to the Operations Team of Mirae Asset Mutual Fund, transactions post-March 25, 202,1, may face these issues. Get live Stock Prices from BSE, NSE, and US Market, and the latest NAV and portfolio of Mutual Funds; check out the newest IPO News, Best Performing IPOs, calculate your tax by using an Income Tax Calculator, know the market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter. Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news.

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