ELSS Funds: Tax Saving, Lock-in and Why Interest Is Falling
Why in the news
Interest in ELSS funds was reported to be falling as more taxpayers adopt the new tax regime, which gives no Section 80C deduction.
Key facts
- Mostly equity-oriented, across large, mid and small caps.
- Section 80C deduction up to ₹1.5 lakh a year; saving up to ₹46,800 in the top slab.
- Lock-in: 3 years; no early withdrawal.
- Run by professional managers for long-term growth.
| Gains after 3 years (LTCG) | Tax |
|---|---|
| Up to ₹1 lakh a year | Exempt |
| Above ₹1 lakh | 10%, no indexation |
Modes of investment
- Lump sum: 3-year lock-in per transaction.
- SIP: every instalment carries its own 3-year lock-in.
- Available via online platforms or directly with AMCs.
Exam angle
- Section 80C, limit ₹1.5 lakh, lock-in 3 years.
- LTCG exemption: ₹1 lakh a year.