What is ELSS Equity Mutual Fund Scheme ? How to Invest in ELSS?

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Great that you landed on a correct page, which will help you know that – What is ELSS Equity Mutual Fund? This article will help you to understand about it & how to invest in it.

Do you Want to Save Taxes up to 45,000/- Per Annum? Are you confused where to invest-in for tax savings purpose?

Let’s learn What is ELSS & details about it:

What is ELSS?

ELSS means Equity Linked Savings Scheme. ELSS funds are those funds which invest into Tax Savings Equity Mutual Funds. Normally Mutual Funds invest into different categories like Equity, Debt, Cash Markets & etc.

ELSS Mutual Funds invest into Equity, unlike other tax savings instruments, it has 3 years of locking period which is very low in the category. Investing into ELSS Mutual Funds comes up with many benefits like more returns than other tax savings products, less locking period of 3 years. Easy liquidity after 3 years.

An ELSS gives you tax deduction benefit of up to  1.5 lakh under Section 80C. This is the only pure equity investment vehicle that offers Section 80C deduction benefits.

The only catch here is it comes with a 3-year lock-in. Other equity funds don’t carry a lock-in. Remember, the lock-in also applies to your systematic investment plans (SIP); every monthly instalment you make in an ELSS is subject to a 3-year lock-in.

Other than deduction benefits and the lock-in, an ELSS is quite the same as a diversified equity fund. It invests in equity shares of companies across sectors and market capitalisations. When investing in ELSS, care should be taken to not invest in a new scheme every year to save taxes. One ELSS in the portfolio—in which you keep topping up every year—is more than enough.

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