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Tax Saver Fund (ELSS)

ELSS or Equity Linked Saving Schemes allows an individual or HUF a deduction from the total income of up to Rs. 1.5 lacs under Section 80C. These schemes have a lock-in period of three years from the date of allotment of the units. After the lock-in period is over, the units are free to be redeemed or switched.

Benefits of ELSS

Earning deduction of up to 1.5 lacs under Section 80C of the income tax act. This is the only scheme that allows investors to save on tax while earning high returns from investment in equity funds.

ELSS has a lock-in period of only 3 years, This period is the lowest in comparison to other tax saving options such as 15 years in a PPF or 5 years in a Fixed Deposit option. Thereby ELSS provides higher returns with the lowest lock-in period.

If the investors are happy with the returns from the respective ELSS fund, they may choose to continue. Redemption is not compulsory after a period of 3 years. It is only a minimum investment duration, however, there is no maximum investment duration.