Equity Linked Savings Schemes

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An Equity Linked Savings Scheme (ELSS) is an investment scheme, similar to a mutual fund. Per Section 80C, an investor can invest upto Rs. 1,00,000 into equities, and deduct this investment, against his/her income while calculating his/her tax.

ELSSs do not allow withdrawals, during the first three years. Some of the advantages of ELSSs are:

  • allows for investments in capital markets
  • provides tax savings 
  • lock-in period, may provide the investor with benefits of capital appreciation, over the long term, while protecting the investor for market volatility over the short term
  • most fund houses that allow ELSSs allow for investment using Systematic Investment Plans. Hence investors can invest as little as Rs 500/- a month, into these schemes
  • lowest lock-in periods amongst all tax savings schemes under Section 80C (ie. NSC, PPF,  Infrastructure Bonds,   ELSS, ...)

Some of the ELSSs are: