ELSS explained: save tax under Section 80C

ELSS (Equity Linked Savings Scheme) is a category of mutual fund that invests mostly in stocks and qualifies for a tax deduction under Section 80C — up to ₹1.5 lakh of your investment can be deducted from taxable income (saving up to ₹46,800 a year in the highest slab, old regime).

The 3-year lock-in

ELSS has the shortest lock-in of all 80C options — just 3 years, versus 5 years for tax-saver FDs and 15 years for PPF. Each SIP instalment is locked for 3 years from its date.

ELSS vs other 80C options

• ELSS: equity, ~10–14% long-run potential, 3-yr lock-in, market risk.
• PPF: fixed ~7%, 15-yr lock-in, government-backed, tax-free.
• Tax-saver FD: fixed ~6–7%, 5-yr lock-in, interest taxable.

Taxation of gains

Gains above ₹1.25 lakh/year are taxed as LTCG at 12.5% (equity). Note: the new tax regime does not allow 80C deductions, so ELSS's tax benefit applies under the old regime.

→ Find top ELSS funds via the Tax Saver (ELSS) quick screen.