How does the three-year ELSS lock-in actually work?

It applies to each purchase from its own allotment date. A lump sum unlocks fully three years later. With a monthly SIP each instalment is a separate purchase, so the twelfth instalment of a SIP started in April 2026 is only free in March 2030.

How much tax will ELSS save me?

Your investment up to ₹1.5 lakh reduces taxable income by that amount. At the 30% slab plus 4% cess that is about ₹46,800 a year, at 20% about ₹31,200 and at 5% about ₹7,800. Remember EPF, insurance premiums and home loan principal already consume part of the same ₹1.5 lakh limit.

Is ELSS taxable when I redeem?

Yes. Because of the lock-in every redemption is long term. Equity LTCG is exempt up to ₹1,25,000 per financial year across all your equity holdings, and taxed at 12.5% without indexation above that. Spreading redemptions across financial years can use the exemption more than once.

Can I claim ELSS under the new tax regime?

No — 80C does not exist in the new regime. You can still buy an ELSS fund, but with no deduction the three-year lock-in buys you nothing that a plain flexi-cap fund would not.

Is ELSS better than PPF?

They do different jobs. PPF is guaranteed, tax-free and 15 years long, so it belongs in the debt part of a portfolio. ELSS is equity: higher expected return, real downside risk, three-year lock-in. Most investors hold both rather than choosing.

Should I choose a SIP or a lump sum in ELSS?

The tax treatment is identical, so decide on behaviour and risk. A SIP started in April spreads entry, averages out price and avoids the March rush; a lump sum compounds longer but takes full timing risk. The worst option is a hurried lump sum in the last week of March.

What happens after the ELSS lock-in ends?

The units simply become redeemable and the fund continues as a normal open-ended equity scheme. There is no requirement to exit, and holding longer usually helps. Only fresh investment earns a fresh 80C deduction.

Can I stop an ELSS SIP midway?

Yes — you can stop future instalments at any time. Instalments already made stay locked for three years from their own dates and cannot be withdrawn early.

Financial Planning ToolsELSS Tax Saving Calculator

Section 80C · 3-year lock-in · FY 2026–27

ELSS calculator — tax-saving mutual fund returns and 80C savings

Project what a SIP or lump sum in an Equity Linked Savings Scheme could grow to, the tax it saves under Section 80C, and the long-term capital gains due when you redeem — so you see the net figure, not just the gross one.

In Short

ELSS is an equity mutual fund that qualifies for Section 80C up to ₹1,50,000 a year and carries a three-year lock-in — the shortest of any 80C option. Investing the full ₹1.5 lakh saves about ₹46,800 in tax at the 30% slab. At a 12% assumed return, ₹12,500 a month for three years grows to roughly ₹5.4 lakh on ₹4.5 lakh invested. Gains are long-term by construction: exempt up to ₹1,25,000 a year across your equity holdings and taxed at 12.5% above that. The 80C deduction applies only in the old tax regime.

Your ELSS investment

Drag a slider or type a value.

Monthly SIP amount

₹/mo

₹500₹50,000

₹12,500 a month exactly fills the ₹1.5 lakh 80C ceiling over twelve months.

Expected return (p.a.)

4%20%

Diversified Indian equity has averaged roughly 11–13% over long periods. Any single three-year stretch can be far off that.

Holding period

yrs

3 yrs (lock-in)30 yrs

Three years is the legal minimum, not a target. Equity risk falls sharply with longer holding.

Your income tax slab

Old regime rate — 80C is not available in the new regime.

Show LTCG at redemption

12.5% above the ₹1.25 lakh yearly exemption

Your ₹1,50,000 a year is within the ₹1,50,000 80C ceiling. Remember EPF, life insurance premiums, PPF and home loan principal share the same limit.

After 5 years

Gains27%

Projected value

₹10,31,080

₹12,500/mo SIP at 12.0% p.a.

Total invested₹7,50,000

Estimated gains₹2,81,080

80C tax saved each year at 30%₹46,800

₹2,34,000 over 5 years on the ₹1,50,000 a year that qualifies under 80C.

LTCG exempt this year₹1,25,000

Taxable gain at 12.5%₹1,56,080

Capital gains tax− ₹19,510

Net in hand₹10,11,570

Redeeming in tranches across financial years can use the ₹1.25 lakh exemption more than once. Effective return after the 80C benefit and LTCG: 10.7% p.a.

Compare ELSS funds

How the corpus builds

InvestedGains

Now1y2y3y4y5y

The shaded band is the three-year lock-in window. With a SIP the band only frees the first instalment — each later one carries its own three years from its own date.

When each instalment unlocks

The lock-in runs per instalment, from its own allotment date — not from the day you started the SIP. At ₹12,500 a month starting April 2026, the last instalment of the first year is only free in Mar 2030.

Instalment	Invested on	Amount	Free to redeem from	Value at 5 yrs
SIP 1	Apr 2026	₹12,500	Apr 2029	₹22,709
SIP 2	May 2026	₹12,500	May 2029	₹22,484
SIP 3	Jun 2026	₹12,500	Jun 2029	₹22,261
SIP 4	Jul 2026	₹12,500	Jul 2029	₹22,041
SIP 5	Aug 2026	₹12,500	Aug 2029	₹21,823
SIP 6	Sep 2026	₹12,500	Sep 2029	₹21,607
SIP 7	Oct 2026	₹12,500	Oct 2029	₹21,393
SIP 8	Nov 2026	₹12,500	Nov 2029	₹21,181
SIP 9	Dec 2026	₹12,500	Dec 2029	₹20,971
SIP 10	Jan 2027	₹12,500	Jan 2030	₹20,763
SIP 11	Feb 2027	₹12,500	Feb 2030	₹20,558
SIP 12	Mar 2027	₹12,500	Mar 2030	₹20,354
SIP 13	Apr 2027	₹12,500	Apr 2030	₹20,153
SIP 14	May 2027	₹12,500	May 2030	₹19,953
SIP 15	Jun 2027	₹12,500	Jun 2030	₹19,756
SIP 16	Jul 2027	₹12,500	Jul 2030	₹19,560
SIP 17	Aug 2027	₹12,500	Aug 2030	₹19,366
SIP 18	Sep 2027	₹12,500	Sep 2030	₹19,175
SIP 19	Oct 2027	₹12,500	Oct 2030	₹18,985
SIP 20	Nov 2027	₹12,500	Nov 2030	₹18,797
SIP 21	Dec 2027	₹12,500	Dec 2030	₹18,611
SIP 22	Jan 2028	₹12,500	Jan 2031	₹18,427
SIP 23	Feb 2028	₹12,500	Feb 2031	₹18,244
SIP 24	Mar 2028	₹12,500	Mar 2031	₹18,063
SIP 25	Apr 2028	₹12,500	Apr 2031	₹17,885
SIP 26	May 2028	₹12,500	May 2031	₹17,708
SIP 27	Jun 2028	₹12,500	Jun 2031	₹17,532
SIP 28	Jul 2028	₹12,500	Jul 2031	₹17,359
SIP 29	Aug 2028	₹12,500	Aug 2031	₹17,187
SIP 30	Sep 2028	₹12,500	Sep 2031	₹17,017
SIP 31	Oct 2028	₹12,500	Oct 2031	₹16,848
SIP 32	Nov 2028	₹12,500	Nov 2031	₹16,681
SIP 33	Dec 2028	₹12,500	Dec 2031	₹16,516
SIP 34	Jan 2029	₹12,500	Jan 2032	₹16,353
SIP 35	Feb 2029	₹12,500	Feb 2032	₹16,191
SIP 36	Mar 2029	₹12,500	Mar 2032	₹16,030
SIP 37	Apr 2029	₹12,500	Apr 2032	₹15,872
SIP 38	May 2029	₹12,500	May 2032	₹15,715
SIP 39	Jun 2029	₹12,500	Jun 2032	₹15,559
SIP 40	Jul 2029	₹12,500	Jul 2032	₹15,405
SIP 41	Aug 2029	₹12,500	Aug 2032	₹15,252
SIP 42	Sep 2029	₹12,500	Sep 2032	₹15,101
SIP 43	Oct 2029	₹12,500	Oct 2032	₹14,952
SIP 44	Nov 2029	₹12,500	Nov 2032	₹14,804
SIP 45	Dec 2029	₹12,500	Dec 2032	₹14,657
SIP 46	Jan 2030	₹12,500	Jan 2033	₹14,512
SIP 47	Feb 2030	₹12,500	Feb 2033	₹14,368
SIP 48	Mar 2030	₹12,500	Mar 2033	₹14,226
SIP 49	Apr 2030	₹12,500	Apr 2033	₹14,085
SIP 50	May 2030	₹12,500	May 2033	₹13,946
SIP 51	Jun 2030	₹12,500	Jun 2033	₹13,808
SIP 52	Jul 2030	₹12,500	Jul 2033	₹13,671
SIP 53	Aug 2030	₹12,500	Aug 2033	₹13,536
SIP 54	Sep 2030	₹12,500	Sep 2033	₹13,402
SIP 55	Oct 2030	₹12,500	Oct 2033	₹13,269
SIP 56	Nov 2030	₹12,500	Nov 2033	₹13,138
SIP 57	Dec 2030	₹12,500	Dec 2033	₹13,008
SIP 58	Jan 2031	₹12,500	Jan 2034	₹12,879
SIP 59	Feb 2031	₹12,500	Feb 2034	₹12,751
SIP 60	Mar 2031	₹12,500	Mar 2034	₹12,625

What is ELSS?

An Equity Linked Savings Scheme is a diversified equity mutual fund with a statutory three-year lock-in that qualifies for deduction under Section 80C. SEBI requires at least 80% of the portfolio in equity, so returns are market-linked and can be negative in any given year.

Its appeal is the combination of the shortest 80C lock-in and equity upside. The trap is treating it as a March formality: money committed in a rush, in whichever fund is at hand, then redeemed the moment the lock-in lifts. Started as an April SIP and held well past three years, ELSS behaves like any other long-horizon equity allocation — with a deduction attached.

The formula

M = A × [ ((1+i)ⁿ − 1) / i ] × (1+i)

M — projected value of the ELSS holding

A — monthly SIP instalment

i — monthly return = annual return ÷ 12

n — number of instalments

Tax saved = deduction × slab rate × 1.04 cess. LTCG = 12.5% of gains above ₹1,25,000 in the year of redemption, with no indexation.

What ₹1.5 lakh of 80C saves you

Tax saved in the year of investment, including 4% health and education cess, under the old regime.

5% slab

₹7,800

incl. 4% cess

10% slab

₹15,600

incl. 4% cess

20% slab

₹31,200

incl. 4% cess

30% slab

₹46,800

incl. 4% cess

ELSS rules at a glance

Scheme and tax parameters as they stand for FY 2026–27.

ParameterDetail

Deduction limit₹1,50,000 a year under Section 80C, shared with EPF, PPF, life insurance premiums, home loan principal and tuition fees

Lock-inThree years from the date of each purchase — cannot be broken, borrowed against or redeemed early for any reason

Equity exposureAt least 80% in equity and equity-related instruments, per SEBI scheme categorisation

Minimum investmentTypically ₹500 for both SIP and lump sum, with no upper limit on what you can invest

Tax on gainsAlways long-term: exempt up to ₹1,25,000 of equity LTCG a year, 12.5% without indexation above that

DividendsTaxed at your slab rate in the year received; the growth option avoids this drag

Regime80C deduction available only under the old tax regime; the fund itself can be held under either

Switching fundsOnly after the three-year lock-in on the units concerned; a switch is a redemption plus a fresh purchase for tax

On death of the holderUnits can be transmitted to the nominee after one year from allotment, notwithstanding the lock-in

ELSS vs PPF vs tax-saver FD vs NPS

All four qualify for 80C, but they differ on lock-in, risk and how the exit is taxed.

ELSSPPFTax-saver FDNPS (Tier I)

Lock-in3 years15 years5 yearsTill age 60

ReturnsMarket-linked, ~12% long-run average7.1% guaranteed6.5–7.5% guaranteedMarket-linked, mixed equity and debt

RiskHigh — equity volatilityNone — sovereign guaranteeLow — ₹5 lakh DICGC coverModerate — allocation-driven

Tax on exit12.5% LTCG above ₹1.25 lakh a yearFully exemptInterest taxed at slab60% tax-free, 40% must buy an annuity

Extra deductionNone beyond 80CNone beyond 80CNone beyond 80C₹50,000 more under 80CCD(1B)

Best suited toEquity allocation with the shortest 80C lock-inGuaranteed long-term debt allocationConservative savers wanting simplicityDedicated retirement money

Frequently Asked Questions

An Equity Linked Savings Scheme is an equity mutual fund eligible for deduction under Section 80C up to ₹1,50,000 a year. SEBI requires at least 80% of the portfolio in equity, and every purchase is locked in for three years — the shortest lock-in among 80C options.

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Financial Planning ToolsELSS Tax Saving Calculator

Section 80C · 3-year lock-in · FY 2026–27

ELSS calculator — tax-saving mutual fund returns and 80C savings

In Short

Your ELSS investment

Drag a slider or type a value.

Monthly SIP amount

₹/mo

₹500₹50,000

₹12,500 a month exactly fills the ₹1.5 lakh 80C ceiling over twelve months.

Expected return (p.a.)

4%20%

Diversified Indian equity has averaged roughly 11–13% over long periods. Any single three-year stretch can be far off that.

Holding period

yrs

3 yrs (lock-in)30 yrs

Three years is the legal minimum, not a target. Equity risk falls sharply with longer holding.

Your income tax slab

Old regime rate — 80C is not available in the new regime.

Show LTCG at redemption

12.5% above the ₹1.25 lakh yearly exemption

Your ₹1,50,000 a year is within the ₹1,50,000 80C ceiling. Remember EPF, life insurance premiums, PPF and home loan principal share the same limit.

After 5 years

Gains27%

Projected value

₹10,31,080

₹12,500/mo SIP at 12.0% p.a.

Total invested₹7,50,000

Estimated gains₹2,81,080

80C tax saved each year at 30%₹46,800

₹2,34,000 over 5 years on the ₹1,50,000 a year that qualifies under 80C.

LTCG exempt this year₹1,25,000

Taxable gain at 12.5%₹1,56,080

Capital gains tax− ₹19,510

Net in hand₹10,11,570

Redeeming in tranches across financial years can use the ₹1.25 lakh exemption more than once. Effective return after the 80C benefit and LTCG: 10.7% p.a.

Compare ELSS funds

How the corpus builds

InvestedGains

Now1y2y3y4y5y

The shaded band is the three-year lock-in window. With a SIP the band only frees the first instalment — each later one carries its own three years from its own date.

When each instalment unlocks

Instalment	Invested on	Amount	Free to redeem from	Value at 5 yrs
SIP 1	Apr 2026	₹12,500	Apr 2029	₹22,709
SIP 2	May 2026	₹12,500	May 2029	₹22,484
SIP 3	Jun 2026	₹12,500	Jun 2029	₹22,261
SIP 4	Jul 2026	₹12,500	Jul 2029	₹22,041
SIP 5	Aug 2026	₹12,500	Aug 2029	₹21,823
SIP 6	Sep 2026	₹12,500	Sep 2029	₹21,607
SIP 7	Oct 2026	₹12,500	Oct 2029	₹21,393
SIP 8	Nov 2026	₹12,500	Nov 2029	₹21,181
SIP 9	Dec 2026	₹12,500	Dec 2029	₹20,971
SIP 10	Jan 2027	₹12,500	Jan 2030	₹20,763
SIP 11	Feb 2027	₹12,500	Feb 2030	₹20,558
SIP 12	Mar 2027	₹12,500	Mar 2030	₹20,354
SIP 13	Apr 2027	₹12,500	Apr 2030	₹20,153
SIP 14	May 2027	₹12,500	May 2030	₹19,953
SIP 15	Jun 2027	₹12,500	Jun 2030	₹19,756
SIP 16	Jul 2027	₹12,500	Jul 2030	₹19,560
SIP 17	Aug 2027	₹12,500	Aug 2030	₹19,366
SIP 18	Sep 2027	₹12,500	Sep 2030	₹19,175
SIP 19	Oct 2027	₹12,500	Oct 2030	₹18,985
SIP 20	Nov 2027	₹12,500	Nov 2030	₹18,797
SIP 21	Dec 2027	₹12,500	Dec 2030	₹18,611
SIP 22	Jan 2028	₹12,500	Jan 2031	₹18,427
SIP 23	Feb 2028	₹12,500	Feb 2031	₹18,244
SIP 24	Mar 2028	₹12,500	Mar 2031	₹18,063
SIP 25	Apr 2028	₹12,500	Apr 2031	₹17,885
SIP 26	May 2028	₹12,500	May 2031	₹17,708
SIP 27	Jun 2028	₹12,500	Jun 2031	₹17,532
SIP 28	Jul 2028	₹12,500	Jul 2031	₹17,359
SIP 29	Aug 2028	₹12,500	Aug 2031	₹17,187
SIP 30	Sep 2028	₹12,500	Sep 2031	₹17,017
SIP 31	Oct 2028	₹12,500	Oct 2031	₹16,848
SIP 32	Nov 2028	₹12,500	Nov 2031	₹16,681
SIP 33	Dec 2028	₹12,500	Dec 2031	₹16,516
SIP 34	Jan 2029	₹12,500	Jan 2032	₹16,353
SIP 35	Feb 2029	₹12,500	Feb 2032	₹16,191
SIP 36	Mar 2029	₹12,500	Mar 2032	₹16,030
SIP 37	Apr 2029	₹12,500	Apr 2032	₹15,872
SIP 38	May 2029	₹12,500	May 2032	₹15,715
SIP 39	Jun 2029	₹12,500	Jun 2032	₹15,559
SIP 40	Jul 2029	₹12,500	Jul 2032	₹15,405
SIP 41	Aug 2029	₹12,500	Aug 2032	₹15,252
SIP 42	Sep 2029	₹12,500	Sep 2032	₹15,101
SIP 43	Oct 2029	₹12,500	Oct 2032	₹14,952
SIP 44	Nov 2029	₹12,500	Nov 2032	₹14,804
SIP 45	Dec 2029	₹12,500	Dec 2032	₹14,657
SIP 46	Jan 2030	₹12,500	Jan 2033	₹14,512
SIP 47	Feb 2030	₹12,500	Feb 2033	₹14,368
SIP 48	Mar 2030	₹12,500	Mar 2033	₹14,226
SIP 49	Apr 2030	₹12,500	Apr 2033	₹14,085
SIP 50	May 2030	₹12,500	May 2033	₹13,946
SIP 51	Jun 2030	₹12,500	Jun 2033	₹13,808
SIP 52	Jul 2030	₹12,500	Jul 2033	₹13,671
SIP 53	Aug 2030	₹12,500	Aug 2033	₹13,536
SIP 54	Sep 2030	₹12,500	Sep 2033	₹13,402
SIP 55	Oct 2030	₹12,500	Oct 2033	₹13,269
SIP 56	Nov 2030	₹12,500	Nov 2033	₹13,138
SIP 57	Dec 2030	₹12,500	Dec 2033	₹13,008
SIP 58	Jan 2031	₹12,500	Jan 2034	₹12,879
SIP 59	Feb 2031	₹12,500	Feb 2034	₹12,751
SIP 60	Mar 2031	₹12,500	Mar 2034	₹12,625