Passive ELSS (index-based tax-saver fund)

Mon, 18 May 2026 00:00:00 +0000

A passive ELSS is an index-based Equity Linked Savings Scheme (ELSS) that tracks a defined equity index rather than active stock selection, while retaining the Section 80C tax-deduction benefit and the three-year ELSS lock-in . Passive ELSS schemes are a relatively newer category in India, enabled by SEBI framework provisions that allow passive index-tracking within the ELSS structure.

For Indian retail investors using Section 80C, passive ELSS offers:

Lower TER: Typically 0.30-0.60 per cent vs 1.5-2.0 per cent for active ELSS.
Section 80C deduction: Up to Rs 1.5 lakh annual deduction.
Three-year lock-in: Same as active ELSS (shortest among 80C instruments).
No fund-manager risk: Index-tracking eliminates active management risk.

SEBI framework

The SEBI ELSS framework allows passive (index-based) ELSS schemes provided:

Passive ELSS on WebNotes

Passive ELSS (index-based tax-saver fund)

SEBI framework