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?

As ELSS funds are open-ended equity funds, they are taxed in the same way as equity funds. There are no short-term financial gains with ELSS because they have a 3 year lock-in period. They are hence liable to a 10% long-term capital gains tax on gains exceeding ₹1,00,000. Check your ELSS returns on the Upstox ELSS calculator now!