ELSS

ELSS stands for Equity Linked Savings Scheme. It invests mainly in shares and qualifies under section 80C, with a three-year lock-in that is the shortest among the 80C options.

The tax angle

Under the old tax regime, money you put into ELSS, up to the ₹1.5 lakh 80C cap, is deducted from your taxable income, so it does two jobs at once: saves tax now and invests for growth. That dual benefit, plus the short lock-in, is why ELSS is a popular 80C choice. The catch is simple and important: the deduction only exists in the old regime. Under the new regime there is no 80C, so an ELSS is just an equity fund that happens to have a lock-in.

The lock-in, and the risk

Each instalment is locked for three years from the day it is invested, so in a SIP every monthly amount has its own three-year clock. Because ELSS holds equity, its value rises and falls with the market, and three years is not always long enough to ride out a dip. So treat it as a long-term equity investment that also saves tax, not as a three-year deposit, and do not count on a specific figure exactly when the lock-in ends.

How it compares

Against other 80C options, ELSS offers the highest growth potential and the shortest lock-in, but also the most ups and downs. See it next to the alternatives in ELSS vs PPF vs FD, and how the SIP lock-in and tax work in ELSS explained.