What is ELSS?

Background

ELSS (Equity Linked Savings Scheme) funds are equity mutual funds that qualify for tax deduction under Section 80C with a mandatory 3-year lock-in.

Explanation

ELSS combines tax saving and equity growth. You can invest via lump sum or SIPs up to the 80C limit. Because of the lock-in, you cannot redeem units before three years, which also encourages long-term investing. Returns are market-linked and subject to LTCG tax rules.

Example

Investing ₹1 lakh annually in an ELSS fund for 10 years at an assumed 12% can build a large equity corpus that later supports your retirement plan, while also reducing taxable income during your working years.

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