ELSS- Equity Linked Saving Scheme

What is ELSS- Equity Linked Saving Scheme?

An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund that doesn’t just help you save tax, but also gives you an opportunity to grow your money. It qualifies for tax exemptions under section (u/s) 80C of the Indian Income Tax Act.

What are the Features of ELSS Mutual Funds?

  • ELSS funds invest a large percentage of their portfolio in equity.
  • They have a compulsory lock-in period of 3 years, which is the shortest amongst all tax saving instruments.
  • You enjoy the dual benefits of capital appreciation from investments in equity along with tax-saving
  • You can opt for dividend pay-outs if you wish to receive regular income or go with the growth option for capital appreciation
  • ELSS Mutual Funds do not have any entry or exit load.
  • Good ELSS Funds generate returns in the range of 10-12 per cent in the long run, among the highest in the tax-saving category of instruments. However, ELSS also comes with some risk, inherent in equity investments.


How to invest in ELSS

  • You can invest in ELSS the same way that you invest in any Mutual Fund.
  • You can invest either as a lump sum or via the SIP (systematic investment plan) route.
  • SIP ensures regularity and discipline and reduces the risk to capital
  • You can invest as little as INR 500 in an ELSS fund
  • While you can claim tax benefit only up to INR 1.5 lakh, you are free to invest as much as you like.


Example of Returns in ELSS.

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