Equity-Linked Savings Scheme: ELSS mutual funds come with a lock-in period of three years
An equity-linked savings scheme or ELSS is one of the most popular mutual fund categories that offer tax benefits. Under provisions of Section 80C of the Income Tax Act, 1961, one is eligible for claiming tax deductions of up to Rs 1.5 lakh in taxes by investing in equity-linked saving scheme. ELSS mutual funds come with a lock-in period of just three years, which is far lesser, compared to the other tax-saving instruments. According to stocks and mutual fund investment platform Groww, apart from offering tax-saving benefits, ELSS is a diversified equity mutual fund and also serves the purpose of long-term capital growth
Investors have the flexibility to invest in ELSS mutual funds either through systematic investment plan (SIP) or by making lump sum investments. Capital appreciation potential, low lock-in period, as well as tax benefits have made ELSS mutual funds one of the preferred tax saving investment options in recent times.
“ELSS is one of the most popular equity mutual funds categories. From January 2020 till March 2021, almost 20 per cent of the investors on Groww chose ELSS. Of the total assets under management for equity schemes, 17 per cent was allocated to ELSS,” said Harsh Jain, Co-founder and COO, Groww.