ELSS

Planning your taxes is an integral part of your financial planning,.

An ELSS is a diversified equity mutual fund which has a majority of the corpus invested in equities. By investing through ELSS, investors enjoy both the benefits of capital appreciation, as well as tax benefits. 

Since it is an equity fund, returns from an ELSS fund reflect returns from the equity markets. 

This type of mutual fund has a lock in period of 3 years from the date of investment. This means if you start a Systematic Investment Plan in an ELSS, then each of your investments will be locked in for 3 years from the respective investment date. 

Investors can exit ELSS by selling it after 3 years. 

Similar to other equity funds, ELSS funds have both dividend and growth options. Investors get a lump sum on the expiry of 3 years in growth schemes. On the other hand, in a dividend scheme, investors get a regular dividend income, whenever dividend is declared by the fund, even during the lock-in period. 

For tax purposes, returns from an ELSS scheme are tax free.