Not only you can claim the exemption u/s 80 C but also the gains will be exempt from tax.
ELSS stands for Equity Linked Savings Scheme. These are tax-saving mutual funds that you can use to save income tax of up to Rs 1.5 lakh under Section 80C. ELSS funds have a lock-in period of 3 years and invest a majority of their portfolio in the stock market.
While the minimum amount that can be invested in ELSS is Rs 500, there is no cap on the maximum you can put in. These investments come with a three-year lock in period and can be withdrawn completely on completion of the stipulated time.
Any investment towards this fund up to Rs 150,000 is eligible for tax deduction under Section 80C of the Income Tax Act. The returns received on maturity of the plan is not taxable as well. This is because there is no long term capital gains tax on equity investments, and with its three-year lock-in, ELSS funds automatically complete the one-year period beyond which equity investments become tax-free.
How can I invest in ELSS funds?
You can invest in ELSS through the fund company’s website.Investments can be made in lump sum, but the recommended way is through Systematic Investment Plans (SIP) that allow you to average your investment and save you from catching a market peak. Do remember that each SIP is considered to be a fresh investment and every individual SIP carries a lock-in of 3 years.
ELSS funds have both dividend and growth options. In the dividend option an investor is entitled to dividends even during the lock-in period. In case of growth funds, the investor gets a lump sum once the lock-in period is over.
