Equity: ELSS

What is it?

Equity-Linked Savings Schemes (ELSS) funds allow investors to reduce their taxable income up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. According to SEBI, they must invest 80% of their total funds in equities and have a lock-in period of 3 years.

Objective

The objective of the ELSS funds is to promote saving and investing habits among individuals. They aim to generate maximum return for investors by investing majorly in equity instruments.

Suitability and opinion

ELSS funds are most suitable for investors looking to reduce their tax liabilities. We feel investors can take advantage of tax benefits and capital appreciation. We believe that investors should understand the risks involved in this category and should not invest blindly for tax advantages as these funds are market-linked. Also, you should invest in these funds only if you have a time horizon of at least 3 years as these funds have a lock-in period of 3 years.