How-to ELSS 80C

How to build a tax-saving ELSS portfolio (Section 80C)

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ELSS portfolio for 80C is a tax + equity dual purpose. 3-year lock-in (shortest among 80C options), direct equity exposure, and tax-free growth within Rs 1.25 lakh LTCG threshold annually.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with any AMC or platform. No affiliate commission is earned.

Market-risk disclaimer. Mutual fund investments are subject to market risks. Past performance is not indicative of future returns. ELSS is 100% equity; expect 30-40% drawdown in bear markets.

CA-consultation disclaimer. Old vs new regime choice depends on full income profile. Consult a Chartered Accountant for personalised advice.

Step-by-step procedure

See the procedure infobox above for the seven steps.

Old vs new regime quick check

IncomeOld regime savesNew regime saves
<Rs 7.5 lakhMarginalOften better (rebate)
7.5-15 lakhOften better if 80C+80D+24b usedBetter if no exemptions claimed
15-50 lakhOld wins with full 80C+80D+24bNew wins if minimal exemptions
50 lakh+Depends on HRA / deductionsOften better

Run both regimes through ClearTax / official IT calculator.

ELSS vs other 80C options

OptionLock-inExpected returnTax on return
ELSS3 years11-13%LTCG 12.5% > 1.25L
EPF (mandatory)Until 588.15%Tax-free
PPF15 years7.1%Tax-free
NSC5 years7.7%Slab on interest
Tax-saver FD5 years6.5-7%Slab
Sukanya Samriddhi21 years8.2%Tax-free
Life insurance premiumPolicy termVariableTax-free at maturity (cap)

ELSS shortest lock-in + highest expected return; but equity volatility tradeoff.

Lock-in calendar example

Rs 12,500 SIP starting Jan 2026:

SIP dateUnlock date
5 Jan 20265 Jan 2029
5 Feb 20265 Feb 2029
……
5 Dec 20265 Dec 2029

Each tranche separately locked.

See also

External references

References

  1. SEBI (Mutual Funds) Regulations, 1996.
  2. Income Tax Act, 1961, Sections 80C, 112A.
  3. Finance Act, 2024.
  4. SEBI Categorisation Circular, October 2017.
  5. AMFI Best Practice Guidelines on ELSS operations.

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