Equity Linked Saving Scheme (ELSS)

An Equity Linked Saving Scheme (ELSS) or tax saving mutual funds help investors to save taxes up to Rs 1.5 lakh under Section 80C of the Income Tax Act. An ELSS comes with a mandatory lock-in period of three years, the shortest lock-in period among tax-saving investments permitted under Section 80C. ELSS funds are considered ideal for new investors to start their investments in equity mutual funds.

The mandatory lock-in period helps investors to weather the ups and downs in stock market, and pocket good returns. Since ELSS funds invest in equity or stocks, they have the potential to offer higher returns than the other tax-saving investment options available under Section 80C.