ELSS

Equity Linked Savings Scheme — a tax-saving mutual fund that qualifies for ₹1.5 lakh deduction under Section 80C, with a mandatory 3-year lock-in period.

ELSS (Equity Linked Savings Scheme) is a category of equity mutual fund that qualifies for income tax deduction under Section 80C of the Income Tax Act. ELSS funds invest primarily in equity and equity-related instruments.

Key features

**Tax benefit**: Investment up to ₹1.5 lakh/year qualifies for 80C deduction (saves ₹46,800/year for 30% tax bracket)

**Lock-in**: 3 years — the shortest lock-in among all 80C instruments

**Returns**: Market-linked, typically 11–13% CAGR historically (no guarantee)

**Tax on returns**: LTCG 12.5% on gains above ₹1.25 lakh/year after 1-year holding

ELSS vs other 80C instruments

**ELSS SIP strategy**: Because each SIP installment has an independent 3-year lock-in, a ₹5,000/month ELSS SIP means your January 2025 installment unlocks in January 2028, February 2025 installment unlocks in February 2028, and so on.

**Best for**: Investors in 20%+ tax bracket who want equity exposure with tax benefit and can commit for 3+ years.

Use our Free SIP Calculator to see how ELSS applies to your investment scenario.

ELSS

Key features

ELSS vs other 80C instruments

Other Glossary Terms

SIP

CAGR

NAV

AMFI

SWP