Equity Linked Savings Scheme (ELSS) is an open ended mutual fund scheme with a statutory lock in of 3 years and which invests a minimum of 80% of its assets in equities. It is the only mutual fund scheme in India which qualifies for tax deduction under Section 80(C) of the Income Tax Act.
ELSS offers investors an amazing opportunity to earn quality returns on your investment while saving taxes as well. Since there is a mandatory lock-in period of 3 years, it instils disciplined investment approach amongst consumers.
ELSS offers tax saving opportunity to investors coupled with high returns, which works as an incentive for investors to opt for it. During the income tax filing season, many investors look for avenues to hoard their money and save taxes on that investment. This proliferates the number of individuals investing in ELSS.
Features of ELSS
- Investments upto ₹1.5 lakh are eligible for deduction from your taxable income, provided it remains locked in for 3 years in the scheme. Also, Long Term Capital Gains upto ₹1 lakh from ELSS are also exempted from tax.
- To avail the tax benefit provided by ELSS, an investor should remain invested in the scheme for a minimum duration of 3 years. This inculcates good investing habits amongst consumers, who find it hard to save.
- ELSS invests predominantly in market-linked instruments, such as equities which yield high returns in the long run. Compared to other tax-savings options