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Is It Possible For Me To Deposit Rs 1 Crore In ELSS Mutual Funds?

Individuals engage in mutual funds with the expectation of receiving substantial returns over time based on dividends and capital gains.

Mutual funds are among the most effective long-term investment solutions. Investors don’t need to have a large sum of money to make a profitable investment. Small amounts can be invested in mutual funds regularly through systematic investment strategies (SIPs). This is why mutual funds are beneficial because they make investing more easier.

Under section 80C of the Income Tax Act, ELSS mutual funds are subject to a tax deduction of Rs 1.5 lakh. It also comes with a three-year lock-in period. However, investors can keep their assets for as long as they desire. ELSS is an attractive investment option to build wealth while also saving money on taxes.

A multi-cap mutual fund is a good choice if you want a pure investment alternative. However, before you invest, understand more about ELSS funds:

What are Tax Saving Mutual Funds?

Tax-advantaged mutual funds are similar to regular mutual funds but with the added benefit of tax savings. The tax-saving mutual funds have a unique feature in that the investments made in them are subject to tax deductions under section 80C of the Indian Income Tax Act. Most tax-saving mutual funds are ELSS plans, which invest in the growth-oriented equities market.

Understand The Power Of SIPs

A systematic investment plan (SIP) is a mutual fund investment strategy. This allows investors to invest a small sum regularly. Investors can invest weekly, quarterly, annually, or semi-annually, depending on their comfort level. Additionally, using SIP, investors invest any amount they want. On the other hand, an investor cannot invest more minor than the fund’s minimum investible amount.

As a result, SIP investing in mutual funds is a great investment strategy. Furthermore, SIPs are effective because they help to reduce market volatility. You benefit from buying additional fund units at a reduced price when the markets are down by continuing the SIP. You buy fewer units when the markets are rising. As a result, rupee cost averaging is obtained by investing in mutual funds via SIP. 

Types of Equity-linked Savings Scheme (ELSS)

Tax-saving mutual funds are divided into two categories. The dividend plan and the growth scheme are the two options. While dividend schemes offer supplementary income in the form of dividends issued by the fund house from period to period based on availability of distributable surplus, growth schemes offer long-term capital appreciation that can be liquidated at the end of the maturity period.

Dividends are not taxed or subject to lock-in periods, and they can be withdrawn out or reinvested in the fund, allowing for tax advantages. The ELSS growth plans have no such provisions. 

Features of Tax Saving Mutual Funds

  • If you can’t even afford to put a lot of money into the fund, you can invest in ELSS with just Rs.500. Unlike PPF and NSC, ELSS has no maximum investment amount.
  • Although there is no upper limit, tax benefits are limited to investments of Rs.100,000.
  • A three-year lock-in period applies to tax-saving mutual fund investments.
  • Since ELSSs are mutual funds, their investments are subject to low, medium, or large market risks, depending on where the assets are invested.
  • The most frequent tax-saving mutual funds are ELSS and open-ended mutual funds.
  • These mutual funds allow subscribers to designate themselves.
  • Entrance and departure loads are common in ELSS schemes. These are the fees that fund providers charge when investors buy, sell, redeem, or transfer fund units.

Benefits of Tax Saving Mutual Funds

  • Tax savings of up to Rs.1.5 lakh are available on investments made in these schemes.
  • Long-term capital gains are not taxed in these systems.
  • These plans can be used to save money for future needs, such as buying a car or paying a down payment on a house.
  • SIPs (Systematic Investment Plans) allow people to invest monthly, eliminating the need to invest all at once.
  • Portfolio assets are not concentrated in one location; portfolios are kept diverse to reduce the danger of catastrophic losses.
  • While you won’t be able to withdraw the capital, you will be able to cancel the dividends received, even if the lock-in period is still in effect.
  • Other investing options have a lock-in duration of 6 to 15 years. However, these mutual funds only have a 3-year lock-in time.
  • Because these plans are open-ended, you can invest at any time of year.
  • Fund managers with extensive market experience carefully manage the funds. As a result, investors with no prior market experience can invest in these products.


As you can see, building a 1 crore portfolio is not difficult if you invest in the correct investment scheme. By investing in ELSS, you save taxes and eliminate the need for further portfolio diversification, allowing you to build a large corpus just by investing the taxes you save each year through ELSS.

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