What is the Full Form of ELSS? 

The full form of ELSS is Equity Linked Saving Scheme. It is an open-ended equity mutual fund that invests in equity-related products and equities. This special category falls under mutual funds and qualifies for tax deductions under Section 80C of the Income Tax Act, of 1961. Accordingly, the ELSS is also commonly referred to as tax-saving mutual funds. 

Also Read: What is the Full Form of TMB? 

Features of Equity Linked Saving Scheme

The prominent features of ELSS or Equity Linked Saving Scheme include:

• Lock-in period: Where tax-saving FDs and PPFs come with extended lock-in periods, Equity Linked Saving Scheme offers a comparatively short period of only three years.
• Inflation-beating returns: The ELSS invests primarily in the stock market which ultimately allows them to generate higher returns.
• Tax treatment: Investors in India can save tax under Section 80C by simply investing up to Rs. 1.5 lakh annually. Apart from this, Long Term Capital Gains of up to Rs. 1 Lakh are not subject to tax. In cases where the returns surpass Rs. 1 lakh in a year, a 10% LTCG tax is applicable. 

Also Read: What is the Full Form of SBI?

What are the Benefits of Investing in ELSS Mutual Funds?

ELSS mutual funds are a popular option among investors for numerous reasons. Since they invest at least 80% of the scheme’s assets in equities, returns are directly linked to the stock market’s overall performance. So, if you are someone who likes to invest for the long term, you can enjoy a great deal.

Apart from this, investors can also avail of a tax deduction on investments of up to Rs. 1.5 lakh every year. The ELSS also offers a mandatory lock-in period of three years which is actually the shortest one among other tax-saving investment avenues. 

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