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