ELSS (Equity Linked Savings Scheme) — Mutual Fund Term Explained

An equity fund eligible for ₹1.5 lakh deduction under Section 80C. Mandatory 3-year lock-in per installment. Best tax-saving option with equity returns.

ELSS funds invest at least 80% in equity and qualify for up to ₹1.5 lakh annual deduction under Section 80C. Each investment installment has a mandatory 3-year lock-in — the shortest among all 80C instruments.

With a 30% tax slab, ₹1.5 lakh investment saves ₹46,800 in tax.

Related terms

• LTCG (Long Term Capital Gains) — Tax on mutual fund gains after the qualifying period. For equity: 12.5% on gains above ₹1.25 lakh/year after 1 year. For debt: slab rate.
• STCG (Short Term Capital Gains) — Tax on equity fund gains if held less than 1 year. Flat 20% on any gain as per Budget 2024.
• Equity Fund — A mutual fund investing primarily (≥65%) in stocks. Highest long-term return potential but highest short-term volatility.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.