How is the lock-in period calculated for ELSS?

The lock-in period for Equity Linked Savings Schemes (ELSS) is 3 years from the date of investment. This lock-in mandates that investors cannot redeem or withdraw their ELSS investment for at least 3 years after investing.

The key aspects of the ELSS lock-in period are:

• Duration: The minimum commitment is 3 years from the date of investment. No partial withdrawals are allowed during lock-in.
• Commitment: Investors must remain invested for the full lock-in period to avail tax benefits. Premature withdrawals face penalties.
• Tax benefits: ELSS investments up to ₹1.5 lakh are eligible for deduction under Section 80C. Long-term capital gains above ₹1 lakh are taxed at 12.5% (as per Union Budget 2024) if you sell the funds after 1-year from the lock-in period.
• Long-term investment: The lock-in period facilitates long-term capital growth to potentially generate higher inflation-adjusted returns.
• Flexibility: After 3 years, investors can redeem fully or partially or remain invested depending on their financial goals.