Equity Linked Savings Scheme

An Equity Linked Savings Scheme, popularly known as ELSS, is a type of diversified equity scheme which comes, with a lock-in period of three years, offered by mutual funds in India. ^{[1] [2]} They offer tax benefits under the Section 80C of Income Tax Act 1961. ^[3] ELSSes can be invested using both SIP (Systematic Investment Plan) and lump sums investment options. ^{[4] [5] [6]} There is a three years lock-in period, and thus has better liquidity compared to other options like NSC and Public Provident Fund. ^[7] Mutual funds are subjective to fluctuations in the market.

Features

• Investment Options: ELSS investment can be made in SIPs as well as on a lump sum basis.
• Lock-in Period: These have a lock-in period of three years which is much more flexible than NSC and PPF.
• Market Exposure: ELSS funds majorly invest in equity and related instruments, they are highly exposed to market risks hence very volatile.
• Tax Benefits: Investment of up to ₹1,50,000 every financial year is eligible for deduction under section 80C.
• Returns: A flat rate of 10% is charged on long-term capital gains exceeding ₹1 lakh. ^[8]

See also

• National Pension System (NPS)
• Mutual fund
• Income tax in India

References

1. T, Madhu. "Tax saving: Recycling your ELSS investments is a very bad idea". The Economic Times.
2. Five mistakes to avoid when investing in an ELSS fund
3. "Funds aimed at enabling investors to avail tax rebates under Section 80-C of the Income Tax Act".
4. Zaidi, Babar. "Investment in SIPs yields better returns than timing the market: Study". The Economic Times.
5. "What's a mutual fund SIP?".
6. "Should you invest a lumpsum in ELSS?". The Economic Times.
7. "Business News Today: Read Latest Business news, India Business News Live, Share Market & Economy News". Archived from the original on 21 February 2013.
8. "ELSS Funds for tax saving under Section 80C; know all the benefits". The Times Of India.