Question 1

What is ELSS?

Accepted Answer

ELSS (Equity Linked Savings Scheme) is a type of equity mutual fund that qualifies for tax deduction under Section 80C of the Income Tax Act. It has a mandatory 3-year lock-in period, the shortest among all 80C instruments.

Question 2

How much tax can I save with ELSS?

Accepted Answer

You can claim deduction of up to Rs 1,50,000 under Section 80C. If you are in the 30% tax bracket, this saves Rs 45,000 in tax per year (plus 4% cess). Lower slabs save proportionally less.

Question 3

What is the LTCG tax on ELSS?

Accepted Answer

After the 3-year lock-in, ELSS gains are classified as Long-Term Capital Gains. As per Finance Act 2024, LTCG above Rs 1,25,000 per year is taxed at 12.5% (without indexation benefit).

Question 4

ELSS vs PPF vs NPS - which is better for tax saving?

Accepted Answer

ELSS offers the shortest lock-in (3 years), highest return potential (equity), and partial tax-exempt returns. PPF is fully EEE but has 15-year lock-in at 7.1%. NPS has additional Rs 50,000 deduction under 80CCD but full withdrawal rules apply at retirement. ELSS is generally preferred for investors with 30%+ tax slab and a 5+ year horizon.

Question 5

Can I do SIP in ELSS?

Accepted Answer

Yes. ELSS SIP is popular because each monthly instalment has its own 3-year lock-in from the date it was invested. So in a 3-year SIP, the first instalment unlocks in month 36, the second in month 37, and so on - creating a rolling unlocking.

ELSS Tax Saving Calculator

Frequently Asked Questions

Explore more calculators