Invest in ELSS, Save Taxes

ELSS: All you need to know.

ELSS refers to Equity Linked Savings Scheme, which allows individuals to redeem upto Rs. 1.5 lacs of their total income tax under the section 80C of Income Tax Act of 1961. It means that if you would like to invest Rs. 50000 in ELSS, then this amount will be deducted from their taxable income, reducing their tax burden by that amount. Although they come with a lock in period, these units can be redeemed after the period.

Advantages of ELSS Mutual Funds

  1. Shortest lock-in period: ELSS comes with the shortest lock-in period of 3 years. Unlike other tax saving fixed deposits that have 5 year lock-in period, ELSS offer higher liquidity in the medium term. PPF, which is another deposit scheme, has 15 year maturity. Therefore, in comparison, ELSS is a better platform.
  2. Higher returns: ELSS, owing to its market linked return, offers higher return possibility as opposed to other 80C investments like PPF and FDs. In medium to long term plans, ELSS has a higher possibility of giving better returns.
  3. Improved post-tax returns: Long term capital gains from ELSS are tax free upto a limit of one lakh. This also means that any gains over one lakh comes at a rate of 10% only. Higher returns when combined with lower tax rates ensure that the investor receives maximum post tax returns.
  4. Easy to manage: With the help of a monthly SIP, one can easily invest in ELSS. This also means that your investment will be regular and managed more effectively.

Tax implications on ELSS

Income tax calculation on the ELSS is very similar to other equity instruments. Short Term Capital Gains (STCG) attracts a tax of 15% and Long Term Capital Gains (LTCG) attracts 10% tax on amounts above one lakh.

How to invest in ELSS

Growth option: While considering the growth option, one must be aware of the fact that benefits can only be accessed after the end of lock-in. This also means that one will not receive benefits in the form of dividends. The fact that an investor can redeem their benefits only after the maturity ensures that they appreciate the NAV, which translates to higher profits. Apart from this, the benefits are subject to market risks.

Dividend option: In this option, the investor receives benefits in the form of dividends. It means that one gets the excessive profits that are over and above in the form of dividends, which are completely tax free. A certain periodicity can be expected here.

Dividend reinvestment: This is a preferred option when the market witnesses an upswing and is likely to continue in the same manner of a while. Here, the investor reinvestment dividend received and adds it to the NAV.

About Jayesh Khandwala

KIFS Trade Capital

Advisory Notice


It has come to our attention that fraudulent SMS messages are being sent by malicious sources, falsely claiming to be from KIFS Trade Capital Private Limited. These messages pertain to the credit of shares, KYC registration, and joining groups. Please do not be alarmed or confused by the content of these SMS messages and simply ignore them.

It is crucial that you do not respond to these messages by phone call or SMS, as doing so may expose you to potential scams and malicious intentions. Engaging with these fraudulent messages could result in financial loss.

KIFS Trade Capital Private Limited does not send messages containing links. We urge you to only trust and follow authentic SMS communications from KIFS. If you receive any suspicious SMS messages regarding KYC, share credit, joining group or any other link in the name of KIFS, please ignore and delete them immediately.

KIFS Trade Capital

Annexure-I: Risk disclosures

  • • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • • On an average, loss makers registered net trading loss close to ₹ 50,000.
  • • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

Source: SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.