Last Updated on
Equity Linked Savings Scheme (ELSS) refers to a class of mutual funds in which an investment up to Rs. 1.5 Lakh a financial year can be used for reducing our taxable income. Here are some lesser known facts about ELSS mutual funds based on two Fin Min Gazette notifications (linked below). I could not locate any recent notification on this, so I assume the rules have not changed. Please correct me, if I am wrong.
ELSS fund rules are stipulated by finance ministry and not SEBI.
1. Minimum investment is Rs. 500 and any investment has to be in multiple of Rs. 500. All my ELSS investments were this way, but I did not realise that this was a rule!
2. ELSS funds only need be open for subscription for 3 months in any FY. They can close after that. We have both closed-ended and open-ended ELSS schemes.
3. If the unitholder dies, the nominee or heir shall obtain the units or corresponding value only after one year from the date of allotment of each unit. If the unitholder is running a SIP and the nominee does not inform the AMC to stop it, this rule would still apply!
4. ELSS funds can only invest in equities and bonds that are convertible to share . Arbitrage is not allowed.
5. ELSS funds should remain invested in 80% equity and convertible bonds at all times. It can hold 20% in cash or money market instruments to handle redemptions. The 80% equity can be managed as per the wishes of the AMC. They can be large-cap, multi-cap or mid-cap funds.
6. Each AMC is allowed to have one open-ended ELSS fund with SEBI approval. Birla has three! Edelweiss and L&T two each! An AMC can have any number of closed-ended ELSS funds!
Sources: GOI Gazette notifications 3rd Nov 2005 and 13th Dec 2005.
Table of Contents
Read more:
How to choose a ELSS mutual fund for saving tax
The Myth About ELSS Fund Lock-in
PPF vs ELSS: Beware of Faulty Comparisons!
Do not use ELSS mutual funds to save tax in the last minute!
Chennai DIY Investor Workshop Jan 29th 2017
The fifth Chennai DIY investor workshop will be held on Jan 29th 2017. Ashal Jauhari and I shall be the speakers. Read more and register for the event.
What Readers Say about You Can be Rich Too
You Can be Rich Too With Goal Based Investing is my new book with Subra(money.com) published by CNBC TV 18.
on 27 November 2016The “best value for money 399 rs” you will ever spend in your life. You will not come across any better no-nonsense authors in personal finance space in India. Totally recommended.
“A must read for every beginner , or even for a seasoned investor , who are lost somewhere in the process. Each chapter is so nicely explained with no jagrons , be it related to Insurance , Investment , Taxation or Mutual Funds.
And at the end calculators are just an eye opener when you put the real numbers , that makes the end Icing on the cake”. By shavneet on 16 November 2016
Check out the other reviews and buy now via Amazon.in for Rs. 399 or Bookadda for Rs. 339/-. Or via Infibeam for just Rs. 307.
The book is also available on Kindle at Amazon.in (Rs. 244.30) or at Amazon.com ($3.36 or Rs. 244.30).
Also at, Google Play Store (Rs. 244.30)
Do check out these related articles:
About the Author
M. Pattabiraman(PhD) is the author and owner of freefincal.com. He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Follow @freefincal “Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis.
He conducts free money management sessions for corporates and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via: Feedburner
Content Policy
Freefincal has original unbiased, conflict-of-interest-free, topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content. We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.Do check out my books
You Can Be Rich Too with Goal-Based Investing
My first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
My second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earnerThe ultimate guide to travel by Pranav Surya
This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for ₹199 (instant download)Free Apps for your Android Phone
All calculators from our book, “You can be Rich Too” are now available on Google Play!Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)
Thanks Pattu for pointing out!!! Was not aware of some of these aspects.
fund houses having more than one ELSS have got the others because of mergers or amc – or purchase of all schemes. So when LnT bought Chola they must have got one, and when they bought Fidelity they must have got one – so over time..they will merge the 2/3…
Yes I realised that :). However they seem to be in no hurry to merge those.
nice article thanks for sharing.