Clarification needed regarding ELSS Mutual Funds.

POSTED BY Krishna Kishore Appala ON April 21, 2012 1:57 pm COMMENTS (5)


I am planning to invest in Canara Robeco Equity Tax Saver by starting an SIP of 3000 per month

and want to continue for 7 years.

But need a small clarification for tax saving.

1) Is it that the 36000 rupees (3000*12 months) comes under 80c only for the first year ?

2) Or that 36000/- comes under 80c every year for all 7 years ?

Krishna Kishore Appala

5 replies on this article “Clarification needed regarding ELSS Mutual Funds.”

  1. Krishna Kishore Appala says:

    Hi All,

    Thanks for the information.

    To add to the question ,

    Yes i am planning to continue investing every year i.e. 36000/- every year.

    So, if DTC comes into effect from next year,

    There is no point in investing 3000 every month and continuing for long term , as it would

    be better to invest in other funds like Franklin Blue chip , HDFC Top 200 , DSPBR Top 100

    Equity to get better returns than elss funds.

    So, please suggest me like

    1) Shall i start SIP in elss funds from next month ?
    2) Wait for next FY and then take a decision based on the DTC announcement ?

    Krishna Kishore Appala

    1. Dear Krishna, Please invest this year for ELSS. For next year, we still have 11 months to wait for implementation of DTC.



  2. Dear Krishna, The investments done in ELSS are eligible for tax benefit only in the first year, you do not get any more benefit for the same amount for merely holding for long term. In the 2nd year, if you again invested some amount (12*3000), the same ‘ll be considered for tac benefit in that FY.



    1. Dear Krishna, please read the typo error in the last line as – the same ‘ll be considered for tax benefit in that FY.



  3. Ramprakash says:

    Well to answer your question, it depends what you originally meant by “want to continue for 7 years”. If you mean to say that invest 3k every month only for the first year and that amount will remain invested for 7 years… then you will get 80c benefit only for that one year. But if you meant to say that you will keep investing 36k (3k * 12) every year for 7 years then yes, you will get 80c benefit for all the 7 years, provided the tax laws remain same which are today.
    But there are good chances that DTC will come into effect next year. And if that happens, then ELSS will no longer enjoy the benefit of 80c. So it looks like this could be the last year to take benefit of ELSS. And may I understand why do you want to invest in ELSS for 7 years. If 80c is not a concern, you should invest in a good long term equity fund.

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