I have a query regarding switching of investments from one Equity Linked Savings Scheme (ELSS) to another. For example, if the investor switches from one ELSS to another ELSS under the same AMC, will the amount be eligible for a tax deduction?
- Devara Siddappa
Your investments in Equity Linked Savings Scheme (ELSS) qualify for a tax deduction of up to ₹1.5 lakh under Section 80C of the Income Tax Act. ELSS comes with a mandatory lock-in period of three years. If you liquidate the investment after three years and invest the money in the same scheme or another scheme with the AMC or with another AMC, your investment would qualify for the tax deduction. However, recycle your ELSS investments only if you can't spare extra money in a particular year to claim the tax deduction. Mindless recycling of ELSS investment would result in compulsory redemption of investment and it would also hit your savings/investment rate in the long run.