What is an ELSS fund?
An ELSS (Equity Linked Savings Scheme) is a tax-saving mutual fund that invests mainly in equities. Investments qualify for a deduction of up to ₹1.5 lakh a year under Section 80C of the Income Tax Act.
How the tax saving works
When you invest in an ELSS, the amount (up to ₹1.5 lakh) is deducted from your taxable income for that year — reducing your tax. The potential equity returns are a bonus on top of the tax benefit.
The 3-year lock-in
ELSS has a lock-in of three years — the shortest among Section 80C options. Each SIP instalment is locked for three years from its own investment date. After that, units can be redeemed anytime.
ELSS vs PPF and other 80C options
ELSS is market-linked (higher potential returns, higher risk) with a 3-year lock-in. PPF is government-backed and tax-free with a 15-year tenure but lower returns. Many investors use a mix. You can invest in ELSS as a lumpsum or a SIP, commission-free, on ROAR.
Frequently asked questions
How much tax can I save with ELSS?
Investing up to ₹1.5 lakh in ELSS can reduce your taxable income by that amount under Section 80C — the exact tax saved depends on your slab.
What is the lock-in period for ELSS?
Three years from the date of each investment — the shortest lock-in among Section 80C instruments.
Is ELSS better than PPF?
They serve different needs. ELSS offers higher potential (market-linked) returns with a shorter lock-in and higher risk; PPF offers safe, tax-free, fixed returns over a longer tenure.
Can I do a SIP in an ELSS fund?
Yes. You can invest in ELSS via SIP; note each instalment carries its own 3-year lock-in.