ELSS tax-saving funds, explained
Around tax season you'll hear 'ELSS' a lot. Here's what it means without the accountant-speak.
A mutual fund with a tax perk
ELSS stands for Equity Linked Savings Scheme. It's a type of mutual fund that invests mostly in shares, with one extra feature: investing in it can reduce your taxable income under Section 80C, up to the limit allowed.
The lock-in
In exchange for the tax benefit, your money stays locked in for three years — the shortest lock-in among the common tax-saving options. You can't pull it out early.
Still a market investment
Because it holds shares, an ELSS rises and falls with the market like any equity fund — the tax benefit doesn't remove that risk. Understanding what it holds matters as much as the tax saving. This is educational, not tax or investment advice.
Ready to start investing?
You'll need a demat account to buy any share in India.