With only ten days remaining, taxpayers throughout India are starting the last sprint to lower their tax liability as the fiscal year ends. Due to their dual promise of tax exemption and possible long-term growth, Equity Linked Savings Schemes (ELSS) have become increasingly popular as the March 31 deadline approaches.
In a climate where every rupee saved counts, ELSS mutual funds are seeing renewed interest from last-minute investors looking to claim deductions of up to ₹1.5 lakh under Section 80C of the Income Tax Act. For many, this is not just about saving tax – it’s about making their money work smarter.
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The Clock Is Ticking: Why ELSS Stands Out
ELSS mutual funds offer the shortest lock-in under Section 80C just three years making them a smart alternative to traditional options like tax-saving FDs (5 years) and PPFs (15 years).
ELSS offers market-linked returns, making it a good entry point into equities for those open to some risk. Returns aren’t guaranteed, but past performance has been encouraging.
Strong Returns Fuel the Rush
Several ELSS schemes have outperformed over the past year, and this is adding to the urgency. Here’s a snapshot of recent performance:
- DSP Tax Saver Fund: 18.81% in the past year
- Motilal Oswal ELSS Tax Saver: 17.70%
- HDFC ELSS Fund: 14.13%
- SBI Long Term Equity Fund: 12.69%
- Canara Robeco ELSS Tax Saver: 10.30%
On a five-year time frame, some of these funds have returned as much as 28–30% average annual returns—dramatic, but not without attendant market risk.
Last-Minute Tax Planners Flock to ELSS
Financial advisors report a surge in ELSS inquiries and redemptions over the past week. “We always see a rush in the last 15 days of March, but this year the equity market optimism is pushing more people toward ELSS,” said a Mumbai-based investment planner.
In contrast to fixed-income instruments, ELSS is tied to the performance of the market and therefore has a greater risk-reward profile. But the brief lock-in period makes it more attractive to young professionals and salaried individuals who want liquidity and growth.
ELSS vs Traditional Tax-Saving Tools
| Tax-Saving Option | Lock-in Period | Return Type | Risk |
|---|---|---|---|
| ELSS Mutual Fund | 3 years | Market-linked | Medium to High |
| Public Provident Fund | 15 years | Government-fixed | Low |
| Tax-saving FD | 5 years | Bank-fixed | Low |
| NSC | 5 years | Government-fixed | Low |
Not Just Tax Saving, But Discipline
The mandatory three-year lock-in in ELSS has an added advantage: it encourages financial discipline. Investors stay committed over a longer term, allowing their investments to ride out short-term market volatility and potentially compound over time.
And for those wondering if they have to exit after 3 years—the answer is no. You can stay invested beyond the lock-in period, and continue to benefit from long-term market growth.
Act Now-Time Is Running Out
With less than 240 hours remaining, taxpayers yet to make their 80C declarations are scrambling for smart options. Thanks to digital onboarding and e-KYC, ELSS investments can be made within minutes—but fund houses and investment portals are already reporting traffic spikes and last-minute rushes.
The message is clear: don’t wait for March 30. Last-minute glitches, bank delays, or KYC issues can derail your investment—and your tax savings.
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