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Equity - ELSS

What is ELSS?

ELSS is an acronym for Equity Linked Saving Scheme. It is a tax saving equity mutual fund investment which invests majority of its assets in equity related instruments.
It comes with a three-year lock-in period. Section 80C of the Income Tax enables an investor to avail up to a tax benefit of Rs 46,800 by investing upto Rs 1.5 lakhs per year in an ELSS. One can also invest more than Rs 1.5 lakh per year in an ELSS but the tax benefit would not exceed Rs 46,800 in a year.
ELSS is suitable for those who are open to risk, have patience and wish to claim tax benefits. It is important to note that gains earned on ELSS are subject to Long Term Capital Gains Tax (LTCG) of 10%

How to invest in ELSS?

One can either invest a lumpsum amount or through a SIP method. In both cases, the lock-in applies. With one can choose an appropriate ELSS scheme from the multiple tax saving mutual fund options available for investment.

Benefits of Investing in ELSS

Tax saving instrument

Lock in period

ELSS (Equity Linked Savings Scheme)

3 years

PPF (Public Provident Fund)

15 years

NSC (National Savings Scheme)

5 years

NPS (National Pension Scheme)

Until retirement