What Is ELSS (Equity Linked Savings Scheme)?
ELSS is a type of equity mutual fund that qualifies for tax deduction under Section 80C of the Income Tax Act, with the shortest lock-in period among all 80C investments.
Why ELSS Is Popular
ELSS has the shortest lock-in (3 years) among 80C options. PPF has 15 years, NSC has 5 years, tax-saving FD has 5 years. Plus, ELSS invests in equities offering potential for 12-15% returns — the highest among tax-saving instruments.
How to Invest in ELSS
You can invest via lump sum or SIP. SIP is recommended as it spreads your investment across market cycles. Minimum SIP amount is ₹500/month. Each SIP installment has its own 3-year lock-in.
ELSS Taxation
Investment up to ₹1.5L qualifies for Section 80C deduction. Returns: LTCG up to ₹1L/year is tax-free. Above ₹1L, taxed at 10%. Dividends are taxed at your slab rate.