ELSS (Equity Linked Savings Scheme)
Tax-saving mutual fund with 3-year lock-in.
What does it mean? (Simple)
ELSS is a type of equity mutual fund that gives you tax benefits under Section 80C. You can claim deduction up to ₹1.5 lakh per year.
The lock-in period is only 3 years, which is the shortest among all 80C options. After 3 years, you can redeem the money.
Since ELSS invests in stocks, there's risk, but also potential for good returns over the long term. It's a good option if you want tax savings plus equity exposure.
Example with ₹ numbers
You invest ₹50,000 in ELSS. You save up to ₹15,600 in taxes (at 31.2% tax bracket). After 3 years, you redeem the investment, which could have grown to ₹65,000 or more.
Common mistakes to avoid
- ⚠️Redeeming immediately after lock-in (consider holding longer)
- ⚠️Not comparing different ELSS funds
- ⚠️Investing only for tax saving, not for growth
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⚠️ Educational only: This explanation is for learning purposes. Please consult a financial advisor for personalized advice.