ELSS

Equity Linked Savings Schemes are a special category of Indian mutual fund that invest at least 80% of assets in equity and equity-related instruments, and qualify for Section 80C tax deduction up to ₹1.5 lakh per financial year. ELSS is the only 80C instrument with true equity exposure — PPF, NSC, and tax-saving FDs are all fixed-income — and therefore the only one with a realistic chance of delivering long-run real returns above inflation.

ELSS carries a 3-year lock-in, the shortest among 80C options (PPF = 15, NSC = 5, tax-saving FD = 5, NPS = till 60). Each SIP instalment locks in separately, so a January 2026 SIP is free to redeem in January 2029. Example: ₹12,500/month (₹1.5 lakh/year) into an ELSS fund returning 12% CAGR over 15 years grows to roughly ₹62 lakh — with the bonus that every year's contribution also reduced tax liability by up to ₹46,800 (30.8% slab).

Taxation on redemption follows equity mutual fund rules: 12.5% LTCG above ₹1.25 lakh/year, no indexation. Note that ELSS only helps under the old tax regime — new-regime taxpayers get no 80C deduction and should prefer a lower-cost index fund.

Use our tax calculator to quantify annual savings from a ₹1.5 lakh ELSS investment, then project the corpus with our SIP calculator.