Investing Guide #47: What is ELSS (Equity Linked Saving Scheme) & How to Use It

 

Want to Save Tax and Grow Wealth? ELSS Might Be Your Best Bet

If you’re looking to reduce your income tax and also start investing, ELSS mutual funds are your smartest choice.

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📘 What is ELSS?

ELSS = Equity Linked Saving Scheme

• A mutual fund that invests in stock market
• Offers tax exemption under Section 80C
• Has a 3-year lock-in period

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📉 Tax Benefit Example

If you invest ₹1.5 lakh in ELSS:

• You save approx ₹45,000 in tax (if in 30% slab)
• Plus, you get potential returns from equity markets
• That’s tax saving + growth — double benefit

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💸 ELSS vs PPF vs FD

Feature	ELSS	PPF	5-Yr FD
Lock-in	3 Years	15 Years	5 Years
Return	10–15%	7.1%	6–7%
Risk	Moderate	Very Low	Low
Tax Benefit	80C	80C	80C

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📌 SIP or Lump Sum?

• SIP spreads market risk
• Lump Sum works well if market is low or near FY-end (March)

Start with even ₹500/month in ELSS via apps like Groww or Kuvera.

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✅ Conclusion

If you pay tax and haven’t used Section 80C fully, ELSS gives you both savings and wealth creation — a smart combo for young earners.

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