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Equity Linked Saving Scheme (ELSS) Mutual Funds - PDF Guide
When people think of tax saving, most imagine fixed deposits, PPF, or insurance policies. But seasoned investors know that to have tax benefits along with the chance to grow your wealth faster, ELSS mutual funds are the best option.
ELSS, or Equity-Linked Saving Scheme, is one of the simplest ways to combine tax planning with long-term investing. It’s also the only tax-saving option that gives you equity exposure with a short 3-year lock-in.
To help you understand this better, we’ve prepared a detailed ELSS Mutual Funds PDF guide that breaks down the concepts in plain, practical language.
What You’ll Learn in This Guide
Inside this guide, you’ll find answers to the exact questions most people have before investing in ELSS:
- What exactly are ELSS mutual funds and why are they so popular among tax savers?
- How much tax can you actually save under Section 80C by investing in them?
- Why a 3-year lock-in makes ELSS stand out from PPF, NSC, or FDs.
- The difference between investing a lump sum and starting an SIP in ELSS.
- Simple tips to pick the right ELSS fund without getting lost in financial jargon.
- What happens after the lock-in period and how you can redeem your money smartly.
This isn’t just theory, we’ve broken it down into plain examples so you can connect it with your own financial goals.
Why You Should Read This?
This guide shows you a smarter way to save your taxes along with the benefit of building long-term wealth through investment in ELSS. By reading it, you’ll:
- Understand how ELSS combines tax-saving with wealth creation in the simplest manner.
- Learn how a small, regular investment can grow into a meaningful corpus over time.
- Discover practical strategies to align ELSS with your financial goals, whether short or long term.
- Avoid common mistakes beginners make while choosing funds.
If you’re planning your taxes this year or exploring better ways to invest, this guide will give you the clarity you need.
Also, Check out our other E-books on stock market and finance as well!
Frequently Asked Questions (FAQs)
What are ELSS mutual funds?
ELSS (Equity-Linked Savings Scheme) is a type of diversified equity mutual fund that gives you the dual benefit of market-linked returns and tax savings under Section 80C of the Income Tax Act.
What is the lock-in period in ELSS funds?
ELSS funds come with a mandatory 3-year lock-in period, the shortest among tax-saving instruments.
How much tax can I save with ELSS?
You can claim a deduction of up to rupees 1.5 lakh per financial year under Section 80C by investing in ELSS funds.
Should I invest in ELSS via SIP or lump sum?
SIPs are a smart way to invest in ELSS because you don’t have to put a big amount at once. By investing small amounts every month, you balance out market ups and downs and manage your money better. Lump-sum works if the market is rising, but for most beginners, SIPs are safer and more comfortable to start with.
Do I need to pay tax on profits from ELSS?
Yes, profits from ELSS are taxable. Since ELSS has a 3-year lock-in, the gains are counted as long-term capital gains (LTCG). You don’t pay any tax if your total gains in a year are up to rupees 1 lakh. But if the profit crosses rupees 1 lakh, the extra amount is taxed at 10% without indexation.