An equity-linked savings scheme (ELSS) is an open-ended equity Mutual fund, offering tax benefits upto ₹1,50,000, under Section 80C of the Income Tax Act, 1961.
By investing in ELSS, you can save some amount every year in taxes and promote the habit of long-term investment and saving. You can invest in ELSS via SIP mode or invest a lumpsum.
In the case of SIP, each instalment will have a lock-in of 3 years. Investors can withdraw their money any time after the three-year period has elapsed. They also have the option of continuing to invest in the fund. Lumpsum investments also attract a lock-in of 3 years.
Lock-in period is the time for which the mutual fund units invested can’t be redeemed.
How are ELSS funds taxed?
ELSS funds are taxed as equity funds. Due to the 3-year lock-in period, there are no short-term capital gains. Long-term capital gains exceeding ₹1,00,000 are taxed at 12.5% as per the 2024 Union Budget changes. Check your ELSS returns on the Upstox ELSS calculator now!