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Why ELSS

Why is ELSS the best tax‑saving investment for you?

Equity Linked Savings Schemes (ELSS) is a mutual fund investment that reduces your taxable income by `1,50,000. With a minimum lock-in period of just 3 years, ELSS has the potential to earn higher returns than most other tax-saving options as most of the portfolio is invested in the stock market.

See how ELSS compares with other tax-saving instruments:

ELSS Tax‑saving FD ULIP NSC PPF EPF

Lock‑in period

3 years 5 years 5 years 5/10 years 15* years Till termination of employment

Taxation aspect

Dividend tax free in the hands of the investors and Capital Gains taxed at 10%# Interest is taxable as per IT slab of individual Maturity/claims proceed are tax free Interest is taxable as per IT slab of individual Interest is tax free Interest is tax free

Returns (p.a.)

Market‑Linked 6%^ Market‑linked **7.6%
(for 5yrs deposit)
7.6% 8.4%

Lock‑in period

Taxation aspect

Returns (p.a.)

*Disclaimer
Source: PPF, NSC data from India post, 5 year Fixed Deposit rate from SBI website (as on 30th Sept'16), EPF rate from EPFO
*Premature closure is not allowed before 15 years. Withdrawal is permissible every year from 7th financial year from the year of opening account.
^Interest rate of SBI 5 year deposit of less than a crore for non-senior citizen. Bank fixed deposit are relatively safer as they are covered under Deposit Insurance and Credit Guarantee Corporation of India to the extent of `1 lakh per account.
**Interest Compounded six monthly but payable at maturity.
^^Taxable if withdrawn before 5 years of continuous service (in case of job change, the investor can transfer account to new employer to maintain continuity).
#Fund is locked in for 3 years.