InvestmentFinancial Glossary
ELSS (Equity Linked Savings Scheme)
Definition
A category of equity mutual fund that qualifies for tax deduction under Section 80C up to Rs 1.5 lakh per year. ELSS has the shortest lock-in period among all 80C investments at just 3 years. The fund must invest at least 80% of its corpus in equity and equity-related instruments.
Why It Matters
ELSS offers the rare combination of equity market returns and tax savings. Over 10-year periods, ELSS funds have averaged 12-15% annual returns — significantly higher than PPF (7.1%) or tax-saver FDs (6-7%). The 3-year lock-in is the shortest among 80C options, making ELSS the most liquid tax-saving investment available.