Tax Benefits of ELSS Mutual Funds

How do ELSS funds aid in tax saving and can they be pledged for F&O trading?

Equity Linked Savings Schemes (ELSS) are mutual funds offering tax-saving benefits under section 80C of the Income Tax Act, 1961. These funds primarily invest in equities, presenting opportunities and risks akin to equity-oriented schemes.

  1. Tax Deduction: Investments in ELSS offer tax deductions up to ₹1.5 lakhs.
  2. Growth-Oriented: As ELSS funds mainly invest in equities, they have the potential for high returns.
  3. Lock-In Period: ELSS comes with a 3-year lock-in period, post which they can be easily redeemed.
  4. Pledge: Until the lock-in period is over, ELSS funds cannot be pledged. Post lock-in, if they are part of the approved securities list, they can be pledged for F&O trading.