ELSS (Equity Linked Savings Scheme): Features, Documents & Limit

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By Hiral Vakil on March 6, 2019

ELSS stands for Equity Linked Savings Scheme. It is equity-based tax savings mutual funds that qualify for income tax deductions u/s 80C. Investments made up to Rs 1.5 lacs under ELSS qualify for tax benefits. It has a lock-in period of 3 years. 

Any individual who is KYC verified can invest in ELSS. In the case of minors, the guardian has to be KYC verified while investing in the name of the minor. The minor, upon attaining majority should immediately complete the KYC verification process.

Section 80C: Deductions for tax saving Investments

Features of ELSS (Equity Linked Savings Scheme): 

  • ELSS funds have the shortest lock-in period of 3 years compared to different tax saving instruments such as NSC which has a lock-in period of 5 years and PPF which has a lock-in period of 15 years.
  • You can start investing with a low starting amount of just Rs 500.
  • The returns earned on ELSS funds are also tax-free.
  • You have different plans and AMCs to choose from. For example, you can opt for a systematic investment plan or a one time option as per your convenience.
  • It gives you the benefit of Tax saving as well as Capital Appreciation. With the power of compounding, you can build your wealth.
  • ELSS funds are essentially Equity based mutual funds. Hence it offers attractive returns compared to other tax saving options available.

List of documents required to invest in ELSS funds

The investor needs to be KYC verified to start investing in funds. If you are KYC verified, you can start investing right away. No further documents are required. If you are not KYC verified, you will have to complete the verification process before you can start investing. The documents required for KYC verification are:

  • Copy of Address Proof
  • Copy of PAN card
New PAN Application for Residents. View Plan

FAQs:

1. Is there any limit for investment in ELSS? 

There is no upper limit for investment into Equity Linked Savings Scheme. However, only Rs. 1,50,000 will be qualified as a deduction under section 80C. The minimum amount you can invest in ELSS is Rs. 500.

2. Is return on ELSS taxable? 

No. Both principal amount of investment and return on maturity are exempt from tax.