Top 10 ELSS Mutual Funds In India By AUM

How Does ELSS Work?

ELSS mutual funds pool money from investors and invest mainly in publicly listed companies (small, mid, and large-cap companies) stocks across various sectors. The fund is actively managed by professionals who handle buying, holding, and selling of stocks based on market research and long-term potential growth.

You can invest in the top 10 ELSS mutual funds in India through lump sum or SIPs (Systematic Investment Plans), depending on your comfort and strategy. Every investment made into the fund is locked in for three years from the date of purchase. People looking to invest in ELSS usually do so with long-term wealth building and tax-saving in mind.

Benefits of Investing in ELSS Mutual Funds

The benefits of ELSS mutual funds include:

• Diversified portfolio: ELSS funds invest in stocks across sectors and market caps, which helps reduce concentrated risk.
• Start small with SIPs: You can invest monthly through SIPs with amounts as low as ₹500, making it easy to stay consistent with investments.
• Affordable entry point: No high capital is required to get started. Even small investments qualify for tax deductions under Section 80C.

What is the Lock-in Period?

The lock-in period of ELSS mutual funds in India is three years from the date of investment. This means once you invest in ELSS (whether a lump sum or SIP), you cannot redeem the amount until three years have passed. It applies to each SIP instalment individually.

For example, if you invest ₹5,000 through SIP on these dates – June 20, July 20, and August 20, 2025, each instalment will be locked in for three years. So, you can only redeem the June instalment after June 20, 2028, and so on.

The lock-in period helps in the long-term stability of the fund and reduces the chances of impulsive withdrawals. It also ensures that you stay invested long enough to benefit from potential capital growth and tax-saving advantages.

Once the lock-in ends, you can choose to redeem or stay invested for 5 to 10 years based on your financial goals and the fund’s performance.

Tax Implications of ELSS Mutual Funds in India

Under the old tax regime, ELSS mutual funds offer a tax deduction of up to ₹1.5 lakh per year under Section 80C, helping reduce taxable income. You can save around ₹46,800 in taxes depending on your income slab. Long-term capital gains (LTCG) from ELSS, after the lock-in period, are tax-free up to ₹1 lakh per year. Gains above that are taxed at 10 percent.

But if you’re opting for the new tax regime, 115BAC, this scenario changes. Section 80C deductions are no longer available under 115BAC, which means the ₹1.5 lakh tax-saving ELSS benefits don’t apply. But, LTCG up to ₹1 lakh remains tax-exempt, keeping ELSS relevant as a long-term equity investment for financial gains.

ELSS vs. Other Tax-Saving Options: Which is Better?

When comparing the top 10 ELSS mutual funds with other tax-saving schemes like Public Provident Fund (PPF), National Pension Scheme (NPS), and Fixed Deposits (FDs), remember these key points:

• ELSS offers potentially higher returns – around 15 to 18 percent. Whereas, PPF and NPS generate moderate returns between 7 and 10 percent, while fixed deposits yield only 4 to 6 percent.
• Shorter lock-in: ELSS mutual funds in India have only a 3-year lock-in period, compared to five years for FDs and 15 years for PPF. NPS locks your money till retirement.
• Tax comparison: Only LTCG above ₹1 lakh from ELSS is taxable. PPF is entirely tax-free, while NPS and FDs are partially and fully taxable.

If you’re looking for higher post-tax returns in a shorter time frame and are comfortable with market risk, invest in ELSS mutual funds for a better edge compared to other tax-saving options.