Can I withdraw money from ELSS after 3 years?

Yes. ELSS has a mandatory 3-year lock-in period. After completion, you can redeem your units partially or fully. However, staying invested for 5–7 years is recommended for better long-term returns.

Is SIP allowed in ELSS mutual funds?

Yes, SIP is the most popular way to invest in ELSS. Note that each SIP installment has its own independent 3-year lock-in period starting from the date of investment.

How is ELSS taxed on redemption?

ELSS returns are taxed as Long-Term Capital Gains (LTCG). Gains up to ₹1.25 lakh per financial year are tax-free. Any gains above this limit are taxed at 12.5% without indexation.

Is ELSS suitable for short-term investment?

No. ELSS is an equity-linked product and is best suited for long-term investors (5+ years). Short-term investments may be impacted by market volatility.

What happens if I stop my ELSS SIP?

You can stop or pause your ELSS SIP anytime without penalty. However, the installments already invested will remain locked until each completes its individual 3-year lock-in period.

🇮🇳हिंदी में देखें (Read in Hindi)

ELSS CalculatorSave tax under Section 80C and grow long-term wealth

Use this ELSS Calculator to estimate the maturity value of your tax-saving mutual fund investments. See how much wealth you can build while saving up to ₹1.5 lakh under Section 80C every year.

Monthly Investment (₹)

50050,000

Expected Return (% p.a)

825

Time Period (Years)

330

🔒 Minimum lock-in period for ELSS is 3 years

80% / 20%

Principal / Interest

Total Maturity Value

₹5,61,763

🎉 Save ~₹46,800tax every year

Total Invested

₹4,50,000

Wealth Gain

+₹1,11,763

Compare Tax Saving Options

🔒 PPF Calculator 📈 SIP Calculator

What is ELSS Mutual Fund?

An ELSS (Equity Linked Savings Scheme) is the only type of Mutual Fund that qualifies for tax deduction under Section 80C of the Income Tax Act.

It serves a dual purpose: Tax Saving and Wealth Creation. You can claim a deduction of up to ₹1.5 Lakh per year, potentially saving up to ₹46,800 in taxes (for the 30% tax bracket).

Key Features of ELSS

Lock-in Period: 3 Years (Shortest among all 80C options like PPF or FD).
Potential Returns: 12% - 15% (Historically higher than PPF/FD).
Investment Mode: SIP (Systematic Investment Plan) or Lump Sum.
Taxation: LTCG gains above ₹1.25 Lakh are taxed at 12.5%.

ELSS vs PPF: Quick Comparison

Feature	ELSS	PPF
Returns	12% – 15% (Expected)	7.1% (Fixed)
Lock-in Period	3 Years	15 Years
Risk Level	Moderate to High	Risk Free
Tax on Returns	12.5% LTCG above ₹1.25L	Fully Tax Free

Why Choose ELSS?

Shortest Lock-in

With just a 3-year lock-in, ELSS is the most liquid tax-saving option compared to PPF (15 years) or tax-saving FD (5 years).

Inflation Beating Growth

Equity investments have historically outperformed inflation over the long term, helping you grow real wealth.

SIP Convenience

Start tax-saving with as little as ₹500 per monththrough SIP—no need for a large lump sum.

Frequently Asked Questions (FAQs)

Can I withdraw money after 3 years?

Yes, after the 3-year lock-in period ends, you can redeem your units. However, it is recommended to stay invested for 5-7 years for better returns.

Is SIP allowed in ELSS?

Yes, SIP is the best way to invest in ELSS. However, remember that each SIP installment has its own 3-year lock-in period.

How is ELSS taxed?

ELSS gains are treated as Long Term Capital Gains (LTCG). Gains up to ₹1.25 Lakh in a financial year are tax-free. Gains above this limit are taxed at 12.5%.

Fincado Research Team

Fact Checked

Our analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.

Verified: Jan 2026

Methodology: Data-Driven

Editorial Guidelines