What is ELSS

What is ELSS?

ELSS or Equity Linked Saving Scheme is a type of diversified equity mutual fund that qualifies as a valid tax exemption option under the section 80C of the Income Tax Act. It offers dual advantage of tax savings and wealth generation and has the minimum lock in period among all the forms of tax saving investments, i.e. 3 years.

Benefits of ELSS over other Tax Saving Options

• ELSS is one of the best tax saving options as it focuses not only on tax saving but also helps the investor to get the benefits of equity markets in the long run as it attract great returns in comparison to other options.
• As the Long term capital gains out of ELSS funds attract no tax, it offers great returns with the shortest lock in period.
• The minimum investment in an ELSS scheme is very low as compared to other options. Though regular equity mutual funds have a minimum investment of Rs 5,000, you can put in as little as Rs 500 in an ELSS scheme.
• Shorter lock-in period ensures flexibility on part of investors and promotes higher liquidity in one’s portfolio.