We know how much we can invest in different tax-saving investments and what we can earn from them, but very few people are aware of the charges or fees levied by these investment options. These expenses can be in the form of account opening charges, management fees or payment default penalties. It is important to understand these charges or fees because they are deducted from the money you invest in them.
ELSS fund charges
Mutual funds earlier used to have an entry load, which was an upfront fee that the mutual fund company charged on the initial investment made. This entry load was abolished in 2009. Most equity funds have an exit load, but since ELSS funds have a lock-in of 3 years, an exit load or any charge on redemption does not apply to them. The only fee that an ELSS fund levies is the fund management fee. This fund management fee is decided by the mutual fund company, but market regulator SEBI has capped the maximum fund management fee at 2.25%. No ELSS fund can charge more than that.
PPF charges
There is no fee or charge to be paid upon opening or at maturity of a PPF account. However, the PPF does levy a penalty of Rs 50 if the account holder fails to deposit the minimum investment amount of Rs 500 in a financial year. This penalty is charged for every year that the deposit is missed.
NPS charges
The NPS charges a small fund management fee of 0.01% per annum. Apart from this, it levies a one-time registration fee of Rs 100 and a contribution processing fee of 0.25% on each transaction.