Guide to ELSS

Are you on the lookout for tax-saving investments that not only secure your financial future but also offer attractive returns? Enter ELSS, an acronym for Equity Linked Savings Scheme, an investment avenue under Section 80C of the Income Tax Act. Let’s start with what ELSS is and how to invest in it.

What is ELSS?

With its focus on equities, ELSS is a diversified equity mutual fund scheme that offers tax advantages along with wealth growth opportunities for investors. It is distinct from other tax-saving options since it has the potential to yield larger returns.

How to Invest in ELSS?

Investing in ELSS is simple. Individuals can opt for ELSS through various platforms, such as mutual fund houses, online investment portals, or financial advisors like Moneyedge.

  1. Choose a suitable ELSS fund
  2. Complete the necessary KYC formalities
  3. Invest through SIPs (Systematic Investment Plans) or lump sum investments.

ELSS Meaning and Tax Exemption

ELSS offers investors the dual benefit of capital appreciation along with tax-saving advantages. Investments in ELSS are qualified under Section 80C of the Income Tax Act for a tax deduction of up to ₹1.5 lakh, making it an attractive option for tax planning.

Understanding ELSS Scheme

ELSS operates as an open-ended equity mutual fund scheme, where a portion of the invested amount is directed towards equities, allowing for potentially higher returns than traditional tax-saving options like PPF or FDs. This diversification cushions the investment against market volatility.

Benefits of ELSS

Apart from tax benefits, ELSS offers investors flexibility, liquidity, and the potential for higher returns in the long run due to exposure to the equity market. It also has a shorter lock-in period compared to other tax-saving investments.

ELSS Fund Lock-in Period

One distinctive feature of ELSS is its lock-in period, set at 3 years, making it the shortest among all tax-saving investment options under Section 80C. Once the lock-in period ends, investors can redeem or continue with the investment based on their financial goals.


ELSS is a doorway to financial security and development, not just tax savings. It is an appealing option for investors due to its flexibility, possibility for large profits, and shorter lock-in time. With the ever-evolving equities market, individuals may lower their tax burden and create wealth.

Frequently Asked Questions

Can I withdraw ELSS before 3 years?
Before three years have gone from the date of investment, the investor cannot withdraw their money.

Can I invest in ELSS through SIP
Yes you can invest them in SIP or using the lump-sum method and you could prevent taxes on your ELSS mutual fund investments.


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