What is ELSS?

ELSS (Equity Linked Savings Scheme) is a tax-saving investment option that allows you to invest in equity markets with a mandatory 3-year lock-in period, and you can claim tax deductions under Section 80C of the Income Tax Act.

Key Features

• 3-year lock-in period
• Eligible for tax deduction under Section 80C (up to ₹1.5 lakh)
• Invests primarily in equities
• Higher returns due to equity exposure (subject to market risks)
• Long-term wealth creation

Benefits of ELSS

• Tax benefits under Section 80C
• Potential for higher returns due to equity exposure
• Flexibility to choose between lump sum or SIP (Systematic Investment Plan) investments
• Transparency and regulated by SEBI
• Allows diversification across various sectors and industries

Considerations

• Market risk—returns are not guaranteed
• Suitable for long-term investors
• Understand the risk tolerance and choose funds accordingly

Popular ELSS Funds

• Axis Long Term Equity Fund
• Aditya Birla Sun Life Tax Relief '96
• DSP Tax Saver Fund
• ICICI Prudential Long Term Equity Fund