(Last Updated: September 26, 2019)
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What is full form of ELSS? Meaning



  • The full form of ELSS is Equity linked saving schemes. ELSS scheme are basically diversified mutual fund schemes which enjoy tax benefits under Section 80C of The Income tax Act. They are a great savings instrument to grow your money faster than fixed deposits or PFs.

    These schemes are called Equity linked as the mutual fund schemes invest in majority equities. Most of the ELSS( Equity linked saving schemes ) are diversified mutual fund schemes which mean they invest across all classes of the equity of large-cap, mid-cap, and small caps.

    ELSS schemes are also called tax saving mutual funds because they are eligible for section 80C benefits as well.
    What do you think of ELSS? Is it a good investment option? You can share your views on the same.



  • @Ishu Hi, thanks for sharing full form of ELSS i.e. Equity Linked Savings Scheme. ELSS used to be a good long term investment option in India. Is it still so?

    The lock-in period is 3 years only. But, I think few things have changed .

    The maximum tax deduction of 80C is Rs.1.5 lakhs only. So, if one invests in PPF, ELSS both the total amount that can be claimed including both these investment options can't exceed Rs.1.5 lakhs. This seems a bit less to me. If this limit is raised, we can save more taxes.

    Moreover, the overall tax benefit on ELSS seems to have reduced since this is an equity linked saving scheme. With re-introduction of tax on equity, LTCG shall be applicable @10% on equity mutual funds above Rs.1 lakh that too without any indexation benefit. Hasn't this reduced the attractive tax benefit that ELSS gave earlier?

    ELSS used to be a tax free investment previously, that was its biggest highlight. But, now it is not so.

    Am I right in saying so? What do you think?



  • @Ishu ELSS or Equity Linked Saving Scheme is definitely a good investment option to go with as per my viewpoint.
    ELSS or Equity Linked Saving Scheme: Benefits
    Here are some benefits and points that must be considered while putting your money in these tax saving funds:
    1. Amount eligible for Tax deduction: When you invest in ELSS, the amount qualifies for tax deduction under section 80C of The Income Tax Act.

    2. Shorter lock-in period: There is a not so long lock-in period of 3 years in ELSS. A kind of short mandatory holding period as compared to investments like PPF, NPS etc.

    3. Analyse your risk profile: However, you should invest in ELSS only if your risk appetite allows you to do so. This means, if you have the can bear risk to invest in equity, then only go for ELSS. No doubt, ELSS i.e. Equity Linked Scheme can offer superior returns.

    But, equity can be volatile in a short term of 3 years. Since ELSS funds invest in stocks. So, you need to be careful.

    If planned wisely, ELSS can prove to be a good investment instrument thereby contributing to a solid financial portfolio. Now, this is what I think. What about you, any investing ideas to add here? Are my views on Equity Linked Saving Scheme worth considering? Do let me know.



  • Equity Linked Savings Schemes (ELSS) are a category of diversified equity mutual funds that qualify for tax exemption under Section 80C of the Income Tax Act. Over the past three-years, top ELSSs have generated a return between 12%-20% compounded, which is better than any other tax-saving investment product.



  • @Sandra Yes, I think ELSS is overall a good long term investment option for investors who can afford to take some risk. Since these are equity linked schemes so the risk factor surely prevails. But, the returns can also be good as compared to other investment alternatives like PPF, NPS etc.



  • ELSS is Equity Linked Saving Scheme which is typically tax-saving mutual funds. In terms of structure, and functioning, an ELSS is exactly like an equity-oriented mutual fund scheme.

    However, unlike a typical diversified or multi-cap fund, it provides tax benefits under section 80C of the Income Tax Act.

    ELSS funds have a lock-in period of 3 years. Suppose if you invest a particular amount on September 1, 2019, then the amount can be redeemed on September 1, 2022.

    Also, investing in ELSS opens up the possibility of earning superior returns as compared to other tax-saving instruments like fixed deposits and government small savings schemes. I have named few of the best ELSS mutual funds below:

    SBI Tax Advantage Fund – Series II – GrowthELSS
    Kotak Tax Saver Scheme – Direct Plan – GrowthELSS
    Axis Long Term Equity Fund – GrowthELSS
    Invesco India Tax Plan
    Tata India Tax Savings Fund

    Apart from saving taxes, investing in ELSS Fund can be a good diversification to your portfolio. An ELSS fund can provide you an impressive return ranging from 15-18%.

    Note: These are my personal views and not professional advice in any regard.



  • I don't want to go for theoretical part since all other posts have covered it very well. ELSS Fund is a yummy tax-saver avenue which provides shortest lock-in period, i.e. 3 years, followed by 5-years lock-in period with bank deposit.

    Keeping in mind that ELSS fund is not a risk-free avenue. But, there was quite a lot of misunderstanding about risk from people's perspective.

    Do we not consider inflation a risk to our pocket? Can you say that any avenue which does not beat the inflation is called risk-free avenue? Of course not, inflation eats the money and in general, we need to go above that level to earn the real returns.

    Granted, market risk is an ugly one which exist in ELSS. I believe mutual funds have disappointed with the last 2 years portfolio, didn't give a fine performance. But, if you have been investing in the stock market crash since 2008-2009, you will still have tripled your portfolio (including the amounts you've invested). Let me bring the fact here:

    I believe ICICI Prudential Long Term Equity Fund is the oldest fund alive. Say we have invested Rs. 10,000 monthly since 15 years back yesterday (including Market crash 2008-2009):

    Fund: ICICI Pru Long Term Equity (Tax-saving) Fund - Direct
    From Starting Date: 25 Sept, 2004
    To Today Date: 25 Sept, 2019
    Amount Invested: Rs. 18,10,000
    Current Value: Rs. 53, 66,266
    SIP Return (Absolute): 196.46%
    SIP Return (CAGR): 13.37% p.a.

    Let's have discussion from here

    @Ishu: What do you think of ELSS? Is it a good investment option? You can share your views on the same.
    I do believe it's a very good option, especially for those who don't acquire good knowledge in fundamental and technical analysis but want to build wealth with yearly tax deduction benefit. I myself have been investing in this field but not long back. Now, I do believe it's a very good option.

    @Anmol ELSS used to be a tax free investment previously, that was its biggest highlight. But, now it is not so.
    True, the journey of husband tax-saver and wife tax-free lasted. But tax-saver (deduction upto Rs. 1.5 lakhs/year) has its own strength for us. I hope that wife will be back soon. 👫

    A question to all: Which ELSS Funds you have been investing in and why?



  • @DhruvShukla Well said! But, don't you think the introduction of Capital gain tax on Equity funds has somehow affected the popularity and charm of ELSS? It used to be a great tax saver option earlier. For claiming Tax deduction under section 80C we have other investing options.

    ELSS used to outshine the rest of investing options due to its tax free nature previously. This is not so now. What do you think?



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