What is an ELSS Fund and It’s Benefits?

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What is an ELSS fund?

ELSS stands for Equity Linked Savings Scheme. This type of mutual fund that invests at least 65% of its corpus in equity and equity-related instruments. ELSS funds offer tax benefits under Section 80C of the Income Tax Act, 1961. The maximum amount that can be invested in ELSS funds for tax benefits is ₹1.5 lakh per year.

So let’s go ahead with what is ELSS is a diversified equity in mutual fund scheme which enjoys tax benefits under section 80C. We are sure everyone knows that if I’m talking about section atc, maximum reduction that you can get is up to 1,00,000 15th of rupees. What is the locking. Lock in will be minimum three years. In simple words, if I invest my money in an ELSS. I will not be able to withdraw it for a minimum period of three years Ok?

But then a big question arises is that, if I’m doing an sight, then what? Every instalment will have a locking period of 3 years. So as an example, right now, we are in the month of June 2023. The instalment for me will be locked in for three years from me.

The instalment of July will be locked in for a period of three years from the month of July and so on and so forth.

Now let us quickly understand why investing in ELSS can be beneficial. Number one, is that the amount that you could save on taxes could be up to 48,900 rupees. But of course, this amount is subject to your into the 30% tax lab, right? And assuming that you are investing entire 1,00,000 rupees, the maximum amount Now this is maximum amount. What is the minimum amount? Minimum amount is as low as 500 rupees. So for those who give me excuses that I don’t have enough money after doing all the expenses.

So from comparing equity link saving scheme, mutual fund with a taxable FD, definitely elses will give you higher returns. I should not use what definitely. I should say, potentially it will give you higher returns. PPF also compared to that, potentially higher returns . Assist will give same copy paste for even NSC. That is the national savings certificate. ELSS has the shortest lock in.

Here an example. Again, taxable minimum locking. Is five years for FD. Also, the base lockin time is 15 years, with some exemptions, of course. But as compared to these, definitely We can say that ELSS has a very short locking period of Justice, 3 use Now let’s move on to a very important point, which is a whole various parameters that you should analyse before investing in any other three types of returns. The very 1st 1 is calendar return. 2nd one can create in return. Another one can be a good type of return. That is calendar return and training return.

What are the benefits of investing in ELSS funds?

ELSS funds offer two key benefits:

Tax benefits: ELSS funds offer tax benefits under Section 80C of the Income Tax Act, 1961. This means that you can claim a deduction of up to ₹1.5 lakh from your taxable income for the financial year in which you invest in ELSS funds.
Potential for high returns: ELSS funds invest in equity markets, which have the potential to generate high returns over the long term. However, it is important to note that equity markets are also volatile, and there is no guarantee of returns.

What is the lock-in period for ELSS funds?

ELSS funds have a lock-in period of 3 years. This means that you cannot redeem your investment in an ELSS fund before end of the 3-year period. However, you can switch your investment from one ELSS fund to another without having to break the lock-in period.

What is the minimum investment amount for ELSS funds?

The minimum investment amount for ELSS funds varies from fund house to fund house. However, most fund houses offer a minimum investment amount of ₹500 per month or ₹10,000 per year.


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