What is full form of ELSS

(Last Updated On: January 26, 2017)

Full form of ELSS is Equity linked saving schemes. ELSS schemes are basically diversified mutual fund schemes which enjoy tax benefits under section 80C of  Income tax. They are a great savings instrument to grow your money faster than fixed deposits and PFs.

These schemes are called Equity linked as the mutual fund schemes invest in majority equities most of the ELSS( Equity linked saving schemes )  are diversified mutual fund schemes which mean they invest across all classes of the equity of large-cap, mid-cap, and small caps.

ELSS schemes are also called tax saving mutual funds because they are eligible for section 80 C benefits under income tax act.

Advantages of ELSS ( Equity linked saving schemes )

  1. ELSS schemes have better returns than any other investment option available for tax saving. In last few years ELSS schemes have returned about 11-12 % per year on an average which is much better than PPF.
  2. ELSS schemes have the lowest lock-in period of 3 years amongst the tax saving investment options under section 80C. Lower lock-in period ensures higher liquidity which means you have more flexibility to use this money. PPF comes with a lock-in period 0f 15 years.
  3. ELSS gets you exposure to equity markets and access to good fund managers at a low cost.
  4. It’s very easy to invest in ELSS schemes you can invest online or offline anyways
  5. You can start with as little as Rs 500 and invest at regular intervals using SIP to reduce your average cost.
  6. There are a large number of funds to chose from so you can pick up a fund which works for you. You can also switch funds as and when you want.
READ  Want to know more about PPF ? Here is our Guide On PPF - Public Provident Fund India

Which are the best ELSS schemes

ELSS schemes are offered by almost all top fund houses. Check out the list of our top mutual funds for 2017

 Top ELSS Mutual funds for 2017

Frequently asked questions on ELSS schemes

  1. Can i withdraw money from ELSS before 3 years

No, you cannot withdraw money from ELSS schemes before 3 years.

2. If I invest in ELSS dividend schemes which give the regular dividend. Is the dividend income taxable

Yes, dividend income from ELSS funds is taxable. It gets added to your regular income and taxed as per your               tax  bracket

3.   Should I invest one-time lump-sum or using SIP for ELSS schemes?

You should always invest using SIP. It averages your cost and you do not end up dumping money at the end of the year.

4.  Should  I invest in one ELSS funds or multiple funds

Ideally, you should invest in 1 or 2 ELSS funds. you can use bodhik to find the best plan for you.

To read details about ELSS funds read our detailed guide on ELSS

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