An ELSS is a mutual fund scheme that offers the benefits of investing in equities coupled with income tax benefit
Is ELSS different from other equity schemes?
Apart from the income tax benefit u/s 80C, an ELSS resembles a diversified equity Scheme in many ways. A
few of these are:
Broad Investment Mandate
Capital Gains Tax Treatment (10% of the Gains are taxed post-redemption)
Ability to invest through the Systematic Investment plan (SIP) route.
Are ELSS' subject to any lock-in period?
Yes. Every investment instalment is locked-in for a period of three years. During this period, we cannot redeem
or switch into any other Scheme.
Despite this, ELSS subjects investors to the lowest lock-in period compared to other tax saving instruments such
as Public Provident Fund, National Savings Certificates, Tax Saving Bank Fixed Deposits, etc.
Can we invest small amounts in an ELSS?
Yes. You can begin with an amount as low as Rs. 500/-. There is also no maximum limit as such. However, the
income tax benefit is currently restricted to Rs. 1.50 lakhs.
Do all investors save the same amount of tax?
No. That amount depends on the tax bracket you are in.
In the highest tax bracket of 30%, you can save a maximum of up to Rs. 45,000/- in income tax in case you
invest Rs. 1.50 lakhs.
The amount of tax saved will be lower in case you are in the 10% and 20% tax brackets.
Is ELSS the right choice for all investors?
While ELSS offers a credible option to all investors, the decision whether to choose it or not depends on your
individual circumstances. We suggest you consult your Financial Advisor before proceeding.
Should all eligible investors invest a flat sum of Rs. 1.50 lakhs?
Again, it depends on your circumstances. We suggest you consult your Financial Advisor in order to determing
the 'right amount'.
This product is suitable for investors who are seeking
(I) Long term capital appreciation
(II) Investment predominantly in equity and equity related securities.
Investors should consult their financial advisers if in doubt about whether this scheme is suitable for them.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.