ELSS
An equity-linked savings scheme: a diversified equity fund with a three-year lock-in that qualifies for a tax deduction.
How it is identified
Test: minimum 80% in equity, three-year lock-in per instalment, and eligibility under Section 80C of the Income Tax Act
Unit
qualitative
In depth
ELSS has the shortest lock-in among Section 80C options — three years against five for a tax-saving deposit and fifteen for the public provident fund — while carrying full equity risk. The lock-in applies per instalment, so each SIP contribution is locked for three years from its own date, and the last instalment is free three years after it was made. Section 80C is available only under the old tax regime, so the deduction is worth nothing to someone who has opted for the new one. Gains are taxed as equity capital gains on redemption despite the lock-in.
Worked example
A ₹1,50,000 investment under Section 80C saves ₹46,800 in tax at a 30% slab with cess, under the old regime. Under the new regime the same investment saves nothing, and the lock-in remains.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “ELSS” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.