An ELSS Fund (Equity Linked Savings Scheme) is a tax-saving mutual fund that primarily invests in equity (stock market) instruments and offers deductions under Section 80C of the Indian Income Tax Act.
What is ELSS (Equity Linked Savings Scheme)?
| Key Point | Details |
| Type | Equity Mutual Fund |
| Tax Benefit | Eligible for ₹1.5 lakh deduction under Section 80C |
| Lock-in Period | 3 years (shortest among 80C options) |
| Returns | Market-linked (typically 8%–15% or more depending on performance) |
| Risk Level | Moderate to High (since invested in equities) |
| Who Can Invest | Anyone looking to save tax and invest for long-term wealth creation |
| Mode of Investment | SIP (Systematic Investment Plan) or Lump Sum |
| Tax on Returns | Gains over ₹1.25 lakh taxed at 12.5% (LTCG) after 3 years |
Benefits of ELSS Funds:
| Benefit | Explanation |
| Tax Saving | Save up to ₹46,800/year if you’re in the 30% tax slab (₹1.5L deduction under 80C) |
| Shortest Lock-in | Only 3 years (vs. 5 yrs in PPF, 15 yrs in NSC) |
| Higher Return Potential | Invested in equities; can grow faster than PPF or FDs |
| Flexible Investment | SIP or lump sum; can continue beyond 3 years |
| Wealth Creation | Tax saving + equity growth = long-term wealth |
Popular ELSS Funds (as of recent years):
| ELSS Fund Name | Fund House | 5-Year Return (Approx.) |
| Axis Long Term Equity Fund | Axis Mutual Fund | ~10–12% |
| Mirae Asset Tax Saver Fund | Mirae Asset | ~13–15% |
| Canara Robeco Equity Tax Saver | Canara Robeco | ~12–14% |
| Kotak Tax Saver Fund | Kotak Mahindra | ~11–13% |
Returns are historical and do not guarantee future performance.
Points to Keep in Mind:
- Lock-in is strict — no premature withdrawal allowed for 3 years.
- Returns are market-linked, not fixed.
- Best suited for young salaried individuals or taxpayers looking to save under 80C and grow money.
