Equity-linked savings Schemes (ELSS) are mutual fund schemes that offer tax benefits under Section 80C of the Income Tax Act. As on year 2025, investors can claim a deduction of up to ₹1.5 lakh per financial year (subject to change as per annual notifications by the Finance Ministry). ELSS funds are diversified equity funds that invest across large-cap, mid-cap, and small-cap stocks. They come with a mandatory 3-year lock-in period, which is the shortest lock-in among all tax-saving options available under Section 80C. Due to their equity exposure, ELSS funds have the potential to generate higher returns, especially when held for a longer investment horizon, typically 5 years or more. It is generally advisable to align ELSS investments with long-term financial goals like retirement or child’s education needs. For optimal results, a recommended holding period of 6–7 years is suggested to minimize volatility and maximize returns. With the introduction of the new tax regime, consult your tax advisor to determine whether ELSS remains a suitable tax-saving tool for your financial situation.