Benefits of Investing in ELSS Funds

In modern times as of now, being on the periphery of financial leverage isn’t sufficient. The financial crux and expenses are piling up, clipping the wings of the investors in savings and investment. Financial obligations have created a scenario where people are extensively looking for proper financial planning.

This is where the Equity Linked Savings Scheme or ELSS as it is shortly acronym for comes forth as a viable investment option. Part of u/s 80C investment options awarded with the tax-saving benefits, ELSS is one such equity investment that offers an option to invest resulting in wealth creation all the while creating a tax-saving for you.

The major thing keeping the users at bay from investing in the mutual funds and the stock market until now is the fear of losing out on the money and the burden of added expenses. Equity Linked Saving Scheme can help overcome the fear with the option of saving tax all the while creating an investment for wealth creation. In fact, the saving of taxes is one of the major reasons for ELSS’s rise in recent years.

We here look at the benefits of investing in ELSS funds and how they are the ones you should not miss out on. Read along.

  1. Tax exemption

First thing first, the major reason for people giving food for thought to ELSS is because of the ability to save tax. ELSS scheme allows a user to claim tax benefits of up to Rs 46,800 for an annual investment of up to Rs 1.5 lacs. Income Tax Act, 1961 allows you a deduction u/s 80C.


  1. Shortest Lock-in period

ELSS among all of the 80C investments that need to be made to avail deduction has the shortest lock-in period of the lot. It comes with a lock-in period of just 3 years. If you were to look at the tax saving FD’s and PPF, then they constitute of 5-year and 15-year lock-in period respectively. This short lock-in period along with the higher yields gives you an option to invest the amount back and forth again into ELSS creating a cycle of wealth-creating opportunity.


  1. Higher yields

As of norm, most of the 80C investments around come with single-digit of return on an average. The returns are anywhere between 6% – 8%. ELSS meanwhile has the potential to offer a higher yield around 15% – 18% adhering to the investment into a portfolio of equities.


  1. Post-tax benefits

ELSS doesn’t only offer benefits while investing but also offers a good payout at the time of post-tax return. Except for NPS and PPF, ELSS remains the only one that can potentially offer an exemption of up to Rs 1 lakh per annum from ELSS mutual funds. Any long term capital gain over Rs 1 lakh arising out of ELSS funds will be treated to 10%.


  1. Easy to navigate

With most of the equity investment, people find it difficult to navigate around. This is where mutual funds can be of ease and ELSS more of it. ELSS is pretty easy to invest around where you can simply put in your money via the Systematic Investment Plan (SIP) module or even as a lump sum. Hold it in for 3 years and then you can enjoy the tax privileges all the while seeking wealth creation. And whenever you need to sell them, you can simply do so by a few clicks. The funds will be accredited into your account thereupon.


Mutual funds are one of the good investment options around and ELSS is very much part of it. But the sweet part of ELSS in comparison to other mutual fund options is the tax-saving benefit and post-tax exemption that is specially curated for ELSS. It remains one of the alluring investments in comparison to any other u/s 80C investment and mutual fund options. We advise you to invest in ELSS at the very beginning of the financial year so that you can enjoy the full utilization of your deduction.