What is the full form of ELSS
ELSS: Equity-linked Saving Scheme
ELSS stands for Equity-linked Savings Scheme. It is a Mutual fund investment schemes or a type of mutual fund that help you save income tax and provide an opportunity to grow money. So, it is also known as tax-saving funds. It mainly invests in equities (shares) of the companies listed in the stock exchanges to generate market-linked returns.
According to the Income Tax Act, under section 80c, the taxpayers who invest up to INR 1.5 lakh in particular securities can claim it as a deduction from their taxable income. ELSS is one such security, and other securities include PPF, postal savings like NSC, tax-saving FDs, NPS, etc.
Features of ELSS Mutual Funds:
Some of the major features of the ELSS fund are as follows:
- These funds invest a large percentage of their portfolio in equity.
- They have the shortest lock-in period of 3 years as compared to other tax-saving instruments.
- The investors get the dual benefits of capital appreciation from investments in equity along with tax-saving.
- The investors can choose dividend pay-outs if they wish to receive regular income or can go with the growth option for capital appreciation.
- These mutual funds do not have any entry or exit load.
- Good ELSS Funds offer returns in between 10 to 12 percent in the long run, which is highest among the tax-saving instruments.
- Investors get higher returns than an FD and PPF
- You can start by investing a small amount as low as Rs. 500.
- The investor does not need to have the knowledge of the stock markets as the funds are managed by financial experts and fund houses on their behalf.