8.28ELSS funds
1What is it?
ELSS (Equity Linked Savings Scheme) funds are equity funds with a 3-year lock-in. Under the old tax regime, they qualify for the tax deduction known for years as Section 80C (now Section 123 of the Income-tax Act, 2025, from FY 2026-27), up to ₹1.5 lakh in total.
2Why does it exist?
Shortest lock-in among 80C options, with equity growth potential. Under the new tax regime the 80C deduction is not available.
3Diagram
| Invests in | Suits | Risk | Suggested horizon |
|---|---|---|---|
| Mostly equity (80%+) | Old-regime taxpayers saving tax | High | 3-year lock-in; 5+ ideal |
4Quick revision
- ELSS (Equity Linked Savings Scheme) funds are equity funds with a 3-year lock-in. Under the old tax regime, they qualify for the tax deduction known for years as Section 80C (now Section 123 of the Income-tax Act, 2025, from FY 2026-27), up to ₹1.5 lakh in total.
- Risk: High.
- Horizon: 3-year lock-in; 5+ ideal.
5Knowledge check
Q1. ELSS lock-in?Show answer
3 years.
Q2. Tax benefit in the new regime?Show answer
None. The 80C/Section 123 deduction is only available in the old regime.
Q3. Max 80C deduction?Show answer
₹1.5 lakh (shared with PPF, EPF etc.).
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