• ELSS are tax saving mutual funds that invest at least 80% of the funds in equity-related investments.

• They qualify for tax benefit under section 80C.

• They carry a lock-in of 3 years.

Myth 1: Rs. 1.5 Lakh is the maximum limit that you can invest in ELSS funds

Reality:
The limit is for section 80C and not the ELSS tax saving fund, there is in fact, no limit on the amount that you can invest in these funds.
However, the tax benefit that you can avail of for your investments in ELSS funds is limited to Rs. 1.5 Lakh p.a. (alongside other investments allowed under this section).

Myth 2: The amount needs to be withdrawn after the 3 year lock-in period

Reality:
These funds do not have the concept of maturing after the lock-in period. You can let the funds grow for as long as you want.

Myth 3: Lowest lock-in translates to short term investment

Reality: The 3-year lock-in period is the lowest among the investment options within the 80C realm. However, equity including ELSS tax saving funds are not short-term investments, they are better suited for your long-term investments.

Myth 4: ELSS investment can be done only through the Demat account

Reality: While you can invest in ELSS mutual funds through the Demat account, you do not have to have one for investing in this avenue. You can invest via an AMFI-Certified mutual fund distributor or directly through the fund’s website.

Also Read - What is ELSS?

Read more about how to choose an ELSS Funds?

Myth 5: Recent outperformers should be ideal for investment

Reality: You need to look for funds that have had a long-standing performance track record. Remember to look for the ones that will sustain over the long term.

Having busted the myths, now you are all set to make informed decisions regarding your ELSS investments.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.