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ELSS Mutual Funds

Having a good investment portfolio should ensure that you maintain the right balance between getting good returns and also saving tax. Today in the Indian mutual fund market, there are many investment options that help you save on tax as well as fetch you high returns. You can receive tax benefits in India on investing in various insurance products, EMI on home loans, saving schemes and also on ELSS that remains a largely unknown tax saving product.

So let’s discuss in detail about what ELSS is and how it can help you build a strong tax saving investment portfolio.

What is ELSS?

In simple terms, ELSS is equity linked savings scheme that can help you save up to Rs. 1.5 lakh in a financial year under section 80C of the Income Tax Act, 1961. Investment in ELSS mutual funds can be made through SIPS as well as lump sum payment options. These types of funds have a lock in period of 3 years and are considered one of the best tax saving tools in India.

Here’s an illustration that will help you define how you can save a tax saving scheme like ELSS can help you save money.

Particulars Without Tax Saving Investments u/s 80C With Tax Saving Investments u/s 80C
Gross Total Income ` 7,50,000 ` 7,50,000
Exemption u/s 80C Nil ` 1,50,000
Total Income ` 7,50,000 ` 6,00,000
Tax on Total Income ` 75,000 ` 45,000
Tax saved Nil ` 30,000

Why Invest in ELSS with InvestOnline?

With ELSS get dual benefits of saving tax as well as getting high return rates compared to bank FDs, pension scheme and others.

With InvestOnline, ELSS investment has become easy

  • Simple to invest

InvestOnline has curated a list of high performing mutual funds that promise you good returns.

  • Easy to track

With InvestOnline, you can monitor your investment on a 24/7 basis.

  • Easy to withdraw

You can withdraw money investment in just 1 click, without any paperwork

  • Paperless

Saves you from the hassles of filling forms

  • Highly secured

Your data is our priority and with us, your investments are completely secured

  • Investment proof

You can download your investment data from InvestOnline and submit it to the authority for tax saving purpose.

Steps to Invest in ELSS with InvestOnline

Step 1: Visit
Step 2: Click on the mutual fund.
Step 3: select tax saving schemes.
Step 4: Opt for the tax saving scheme you will believe would suit your investment portfolio.
Step 5: Complete the KYC and fill the bank account details.
Step 6: Once the KYC and payment process is complete, you will receive a confirmation mail stating your purchase.

While investing in mutual funds, it is always a wise idea to consult a mutual fund distributor or advisor that will help you with the advice to invest in the right ELSS fund.

Key Features of Equity Linked Savings Scheme -

Investing in Equity Linked Savings Scheme is a great investment option for people who are new to the market. ELSS not only provides the investor with assured returns but also works as a great investment scheme. One can start investing in ELSS from the time they start earning. Besides this, there are various features of ELSS that an investor should know about.

Investment up to Rs. 1, 50,000 can be made in ELSS per year.

ELSS comes with a lock-in period of 3 years.

With ELSS investors can invest money on a lump sum or SIP basis. Investing in ELSS by the way of SIP is beneficial as the investor can pay money on a monthly basis and can also gain long-term returns on investment.

ELSS returns completely depends on the performance of the market.

ELSS offers two types of investment options to the investor-dividend or the growth option.

Under the growth option, a lump sum amount is paid to the investor after the completion of the lock-in period, whereas with the dividend option, a fixed amount is paid to the investor in installments after the completion of the lock-in period.

Benefits of investing in ELSS -

If you think that ELSS works great only as a tax saving tool, then it’s important for you to know about the other advantages of investing in this mutual fund type.

Comes with a 3 year lock-in period:

In comparison to other tax savings scheme such as National Pension Scheme and Public Provident Fund that comes with a lock-in period of 6 and 15 years respectively, ELSS comes with a lock-in period of just 3 years that proves to be beneficial for short-term investors.

Good tax benefits:

ELSS mutual funds provide an investor with a tax benefit of up to Rs. 1, 50,000 as per section 80C of the Income Tax Act, 1961.

Provides high returns:

Under ELSS, an investors’ money is invested in equity-oriented instruments that potentially provide higher returns compared to other saving schemes.

No minimum limit:

A minimum amount of as low as Rs.500 can be invested in ELSS. This makes it easy for young individuals with a low income to consider ELSS a good investment option.

SIP option:

An investor can always opt to invest in ELSS through the way of SIP, wherein he can invest money on a quarterly, monthly or a weekly basis.

FAQs on ELSS -

What is the lock-in period in ELSS mutual funds?

ELSS mutual funds come with a lock-in period of 3 years.

What is the tenure of ELSS mutual funds?

ELSS mutual funds do not come with any specific tenure but come with a lock-in period of 3 years. An investor can invest in this mutual fund type for as long as he wants depending on his investment and risk appetite.

Why should I invest in ELSS?

ELSS provides an investor with great returns as well as tax benefits in comparison to other conventional tax savings scheme such as NPS, PPF and others. ELSS also has the lowest lock-in period in comparison to these schemes.

What are equity funds?

Equity funds are funds that invest in shares of companies of different market capitalization.

Why invest in ELSS through InvestOnline?

InvestOnline is simple and safe to use. Our financial experts help you select the right ELSS fund on the basis of your investment and risk-bearing capacity. It takes less than 7 minutes to invest in ELSS with InvestOnline.

What are the points to remember when investing in ELSS?

When investing in ELSS always remember to look at the long-term performance of the fund. Also, look at the fund house, fund manager, fund portfolio, expense ratio of the fund and other details.

Is it necessary for an investor to hold a Demat account for investing in ELSS?

No, it is not necessary for an investor to hold a Demat account for investing in ELSS.

Is ELSS mutual fund interest earned tax-free?

Yes, the interest earned on ELSS mutual fund is tax-free under section 80C of the Income Tax Act 1961.

Is there any difference between mutual fund and ELSS?

Under ELSS, the money is invested majorly in equities, whereas mutual funds invest money in various investment instruments such as equities, stocks, debt, etc.

Can I withdraw money before the completion of the lock-in period in ELSS?

No, you cannot withdraw money invested in ELSS before the completion of the lock-in period i.e. before 3 years.