What is an ELSS Fund?
Equity Linked Savings Scheme (ELSS) is a category of mutual funds that qualifies for tax deductions under Section 80C of the Income Tax Act. ELSS funds allow you to claim deductions up to Rs. 1.5 Lakhs per year, helping you save up to Rs. 46,800 in taxes depending on your income tax bracket.
Before investing, evaluate how passive index strategies compare. Learn more in our guide to investing in Index ETFs.
ELSS vs. Other Section 80C Instruments
ELSS offers several features compared to traditional tax-saving options like PPF, NSC, or Tax-Saving FDs:
| Instrument | Lock-in Period | Historical Return Range | Risk Profile |
|---|---|---|---|
| ELSS Mutual Fund | 3 Years | 12% - 15% (Market-linked) | High (Equity risk) |
| Public Provident Fund (PPF) | 15 Years | 7% - 8% (Government guaranteed) | Low (Risk-free) |
| Tax-Saving Fixed Deposit | 5 Years | 6% - 7.5% (Bank guaranteed) | Low (Risk-free) |