How To Invest in ELSS in India 2024

Investing in an Equity-Linked Saving Scheme (ELSS) is a great way to save taxes while also generating long-term wealth. Let’s discuss what is ELSS and how to invest in ELSS in a step-by-step manner.

What is ELSS and its Benefits?

Equity-Linked Saving Scheme (ELSS) is an equity mutual fund scheme that offers you tax benefits under Section 80C of the Income Tax Act, 1961. 

Since ELSS funds invest more than 80% of your corpus in equity and equity-related instruments, making it a high-risk investment option. However, the risk is compensated by the potential for high returns in the long term because ELSS funds come with a 3-year lock-in period. 

You can’t withdraw funds within 3 years of investment which actually helps protect you from any short-term ups and downs in the market.

Benefits of Investing in ELSS Funds

  • Tax savings: ELSS investments qualify for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961.
  • High returns: ELSS funds have the potential to generate higher returns than traditional tax-saving options like PPF and NSC.
  • Diversification: ELSS funds invest in equities, providing diversification in your portfolio.
  • Short lock-in period: ELSS has a lock-in period of 3 years, which is shorter than other tax-saving investments like PPF and NSC.

How to Invest in ELSS

Step 1: Open a demat account

You have to open a demat account with any broker like Zerodha, Upstox, or Groww. If you already have a demat account then you can overlook this step.

I am showing you the example of Zerodha here and you can check the complete process to open a Zerodha account.

Step 2: Log in to your broker’s platform. 

Coin login

For example, log in to using your Zerodha account credentials.  The coin platform is specifically designed to invest in mutual funds. 

Step 3: Search the ELSS mutual funds or save-taxes category.

mutual funds categories

You can directly search for the mutual fund that you want to invest in or go to the mutual fund’s Explore section and click on the “save-taxes” option.

Zerodha will list down all the mutual funds based on your selection. You can read our list of best index funds in India to compare the best options available in the low-cost category.

Step 4: Select the mutual fund

save taxes elss funds

Click on the mutual fund. You will get all the information about the mutual fund like current NAV, CAGR, exit load, expense ratio, sectors, and invested stocks. 

Step 5: Select between the “Buy” or ‘SIP’  option 

elss funds in zerodha

With the “Buy” option you can invest a lump sum amount and the “SIP” option helps you invest on a regular basis like investing in monthly SIP. You can go through our guide on how to invest in SIP to understand the whole process in detail.

Step 6:  Click on “Buy now” and then “Confirm” to complete your order.

elss funds order

Once you’ll click “Confirm”, you’ll move to the e-Mandate page where you have to authorize the bank to make regular payments to invest in that mutual fund as per your desired frequency.

Step 7: Complete your “e-Mandate”.

emandate for funds


CriteriaEquity Linked Savings SchemePublic Provident FundNational Savings Certificate
Investment TypeMutual FundFixed Deposit (Govt)Fixed Deposit (Govt)
Lock-in period3 years15 years5 or 10 years
ReturnsMarket-linkedFixed (7.1% p.a.)Fixed (6.8% to 7.2% p.a.)
Tax BenefitsEET
Investment limitNo upper limit, but tax benefits are capped at INR 1.5 lakh p.a.INR 1.5 lakh p.a.No upper limit, but tax benefits are capped at INR 1.5 lakh p.a.

ELSS and PPF both offer EEE (Exempt-Exempt-Exempt) tax benefits, which means the investment, returns, and maturity amount are tax-free. 

However, NSC offers EET (Exempt-Exempt-Taxable) tax benefits, which means the investment and returns are tax-free, but the maturity amount is taxable.

But remember, ELSS attracts long-term capital gains tax above Rs 1 lakh annual returns.

The long-term capital gains of up to Rs 1,00,000 per year are tax-free, and any gains above this limit attract a long-term capital gains tax at the rate of 10%.


In conclusion, ELSS is a tax-saving and investment tool that offers multiple benefits for long-term wealth creation. However, you should do your due diligence and choose the right ELSS fund based on your risk profile, investment goals, and with long-past performance record. 


What is the lock-in period of ELSS?

ELSS has a lock-in period of 3 years, which means you cannot withdraw your investment before the completion of 3 years.

How much can I invest in ELSS?

The minimum investment amount in ELSS varies from fund to fund and can range from as low as Rs. 500. The maximum investment limit in ELSS is not fixed, but the tax benefits are capped at Rs. 1.5 lakh under Section 80C of the Income Tax Act.

Can NRIs (Non-Resident Indians) invest in ELSS?

Yes, NRIs are eligible to invest in ELSS, subject to certain conditions (mentioned below). The Foreign Exchange Management Act (FEMA) states that NRIs are allowed to invest in Indian mutual funds, including ELSS, whether they want to take the money back to their home country (repatriable) or not (non-repatriable).

If you are an NRI, you can invest in ELSS, subject to the following conditions:

  1. You should hold an Indian passport or be of Indian origin
  2. You should have a valid PAN card
  3. You should have an NRE or NRO bank account
  4. You should complete the KYC (Know Your Customer) process for NRIs with the mutual fund company or the intermediary
  5. You should follow the FEMA (Foreign Exchange Management Act) guidelines for NRI investment in India

However, you need to comply with the tax regulations of your country of residence and India, and the capital gains from ELSS investment are subject to tax in India.

Can I switch between ELSS funds?

Yes, you can switch between ELSS funds within the same mutual fund company or different companies, subject to the exit load and tax implications.

However, you should do so only if you have a valid reason, such as underperformance, change in investment goals, or rebalancing of the portfolio.

What are the risks associated with investing in ELSS?

ELSS is a high-risk, high-return investment option that is subject to market volatility, sectoral risks, and company-specific risks. You should be prepared to hold the investment for the long term and have a diversified portfolio to manage the risks.

When can I withdraw my ELSS investment after the lock-in period?

After the lock-in period of 3 years, you can withdraw your ELSS investment partially or fully. However, you should consider the tax implications and the exit load before withdrawing.

About Rajan Dhawan

Rajan has covered personal finance and investing for over 5 years. Previously, he was in the IT field for 8 years after completing his MCA but his deep interest in personal finance led him to become an investing expert. He is passionate about investing, stocks, startups, and cryptos.

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