An Equity Linked Savings Scheme (ELSS) is a open-ended and diversified equity mutual fund which offers tax savings to its investors upto Rs 1.5 lakhs per annum. In fact, it is the only mutual fund available for a tax deduction U/S 80C.

Prior to Budget 2018, ELSS funds were completely tax free. However, from January 31st, 2018, there is a 10% tax on the long-term capital gains in excess of Rs 1 lakh per annum, without indexation benefit.

ELSS funds have a lock-in period of three years. Like other equity based mutual funds, ELSS investors can choose between dividend or growth option.