Question 1

What is ELSS and what is the lock-in period?

Accepted Answer

ELSS (Equity Linked Savings Scheme) is a type of mutual fund that offers tax deduction under Section 80C. It has the shortest lock-in period of 3 years among all Section 80C investment options.

Question 2

How much tax can I save with ELSS?

Accepted Answer

ELSS investments up to Rs 1.5 lakh per year qualify for deduction under Section 80C. At the highest tax slab of 30%, this can save up to Rs 46,800 in taxes annually (including cess).

Question 3

Are ELSS returns taxable?

Accepted Answer

ELSS returns are subject to Long Term Capital Gains (LTCG) tax. Gains above Rs 1.25 lakh in a financial year are taxed at 12.5%. Short-term gains do not apply since the lock-in is 3 years.

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