Question 1

What is an ELSS fund?

Accepted Answer

Equity-Linked Savings Schemes are diversified equity mutual funds that qualify for Section 80C tax deduction (up to ₹1.5 lakh per year) with a 3-year lock-in — the shortest of any 80C option.

Question 2

How much tax can I save with ELSS?

Accepted Answer

Up to ₹46,800 per year if you're in the 30% slab and invest the full ₹1.5 lakh — ₹1.5 L × 30% = ₹45,000 of tax + 4% cess = ₹46,800. In the 20% slab the saving is ~₹31,200; in 10%, ~₹15,600.

Question 3

ELSS vs PPF for 80C — which is better?

Accepted Answer

ELSS: equity returns (~12% historical), 3-year lock-in, 12.5% LTCG above ₹1.25 lakh per year. PPF: 7.1% guaranteed, 15-year lock-in, fully tax-free at maturity. Most planners use both — ELSS for the equity portion of 80C, PPF for the debt portion.

Question 4

Is ELSS available under the New Tax Regime?

Accepted Answer

No. The New Regime disallows 80C entirely. ELSS only saves tax under the Old Tax Regime. Under the New Regime, you can still invest in ELSS for the returns, but you don't get the deduction.

Question 5

What is the lock-in for ELSS?

Accepted Answer

Each SIP instalment has its own 3-year lock-in. So a SIP started today can't be redeemed for 3 years; a SIP added 6 months later is locked in for 3 years from then. The 3-year period is the shortest among all 80C investments.

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