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What is ELSS? – A Small Guide to Equity Linked Savings Scheme?

One of the biggest USPs of investing in mutual funds is the fact that there are schemes to suit every type of investor. No matter if you are aiming for long-term wealth creation or stable returns, there are different types of mutual fund schemes to match your investment goals. Moreover, there are schemes to help you save taxes.

Popularly known as tax-saving funds, Equity Linked Savings Schemes (ELSS) are eligible for income tax deduction under Section 80C of the IT Act. Let us have a detailed look at what is ELSS funds and their tax benefits.

What is ELSS?

Equity Linked Savings Scheme is a type of diversified mutual fund. While the schemes have maximum exposure in equity and equity-related instruments, a part of the investment is made in the debt market.

Just like other types of mutual funds, an investor can either invest a lump sum amount in an ELSS fund of their choice or start a SIP. These funds have a lock-in period of 3-years, and an investor must remain invested throughout this period to claim the tax deduction.

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