Invest in ELSS – Tax Saving Mutual Funds & Save Upto ₹46,800 In Taxes

  • Save up to Rs 46,800 in taxes
  • Highest returns among other 80C options
  • Lowest lock-in of 3 years
  • Recommend investing in monthly SIPs

Why ELSS is the Best Tax Saving Option


Equity Linked Saving Scheme or ELSS is a tax saving mutual fund where you can save upto Rs. 1.5 lakh in a financial year under Section 80C.

Lowest Lock-in of 3 Years

2x higher interest rates than FD/PPF

Option to invest Monthly (SIP)

Invest as low as ₹500

Comparison between ELSS and other tax-saving methods


There are a plethora of savings schemes to help you build your wealth, such as FD, PPF and NSC to name a few. But the returns from these schemes are taxed. This is where ELSS stands out with its dual-benefit – its returns are generally higher & partially taxable (Returns are not taxable until 31 March 2018. After 31 March 2018, returns will be taxable at a concessional rate of 10% if gains are greater than Rs. 1 lakh. This coupled with a mere lock-in period of 3 years is all the more reason for you to invest in ELSS now.

Investment Returns Lock-in Period Tax on Returns
5-Year Bank Fixed Deposit 6% to 7% 5 years Yes
Public Provident Fund (PPF) 7% to 8% 15 years No
National Savings Certificate 7% to 8% 5 years Yes
National Pension System (NPS) 8% to 10% Till Retirement Partially Taxable
ELSS Funds 15% to 18% 3 years Partially Taxable

FAQs (Frequently asked Questions) Question


As a tax-paying citizen, the Section-80 of the Indian Tax Act allows you some breather – a deduction of up to 150,000 from your total annual income.

What are ELSS funds?

ELSS funds are tax saving mutual funds, in which majority of the funds are invested in equity schemes.

What is the lock-in period?

ELSS has a lock-in period of 3 years.

What is the maximum tax benefit that can be availed by investing in ELSS every year?

Under section 80C, one can avail tax benefit upto Rs 45,000 by investing upto Rs 1.5 lakhs per year in tax-saving schemes such as ELSS. You can also invest more than Rs 1.5 lakhs in ELSS.

Why to invest in ELSS?

ELSS has benefits over other conventional tax saving instruments like FDs, NPS, etc. It has the lowest lock in period and the returns are higher than the other tax-saving schemes.

Who should invest in ELSS?

Anyone who wishes to reduce income tax by investing in 80C tax-saving schemes. ELSS is an equity investment. Hence, it is more suitable for people who are open to risk and stay invested for a long time to reap the benefits.

Is there any tax associated with ELSS?

As the lock in period of ELSS funds are 3 years, the gains are treated as long-term gains and they are taxed at 10% for gains over 1 lakh rupees.

What are equity funds?

Equity funds are schemes which concentrate their investments in shares of companies of different market capitalization

Should I choose SIP or lump sum?

An SIP allows you to invest a fixed sum regularly in mutual fund(s) of your choice. A lump sum is when you invest on-time in bulk in mutual fund(s). SIP comes with few advantages:

  • It allows you to invest small amount every month without the stress of paying in bulk
  • Investing all through the year averages the cost of investing – you don’t end up paying too much per unit
  • Gives you financial discipline