How to Redeem ELSS SIP?

What are ELSS Funds?

ELSS is a tax-saving mutual fund that invests mainly in equities and allows tax deduction up to ₹1.5 lakh per year under Section 80C. 

Key Points:

• ELSS invests in the stock market, so returns are market-linked but offer strong long-term growth potential.
• You can invest through SIP or lump sum. Each SIP instalment has its own 3-year lock-in. During these 3 years, you cannot withdraw or redeem the ELSS fund units.
• ELSS has the shortest lock-in among Section 80C options, making it a flexible tax-saving investment.

ELSS Lock‑in Rules for SIP

The most important concept in an ELSS SIP is that every instalment has its own separate 3‑year lock‑in from its investment date. You cannot redeem units linked to any SIP instalment before its individual 3‑year period is over.

Example:

• SIP date: 1 Jan 2022 → Redeemable on 1 Jan 2025
• SIP date: 1 Feb 2022 → Redeemable on 1 Feb 2025
• SIP date: 1 Mar 2022 → Redeemable on 1 Mar 2025

Table: SIP Dates & Unlock Dates

• This means ELSS SIP DOES NOT unlock all at once.
• Units become redeemable month by month as each instalment completes 3 years.

How to Redeem Your SIP Investments In ELSS?

You should follow these steps to redeem your ELSS SIP units:

Step 1. Check which SIP instalments are free to redeem

• Log in to your AMC website, distributor platform, or mutual fund app.
• View your ELSS holdings and check the purchase date or lock-in end date.
• Only units older than 3 years can be redeemed.

Step 2. Decide how much you want to redeem

You can redeem either:

• A specific amount (e.g., ₹1,00,000), or
• A specific number of unlocked units (e.g., 1,000 units)

If your platform does not show instalment-wise details, download an account statement from the AMC or RTA to identify which units are unlocked.

Step 3. Place the redemption request

You can redeem through:

• AMC website/app: Log in → select ELSS fund → Redeem → enter amount/units → confirm.
• Online platforms (Groww, Kuvera, Paytm Money, etc.): Go to portfolio → select fund → Redeem.
• Demat/broker platforms: If units are in Demat form, redeem through your broker.
• Offline: Submit a physical redemption form at the AMC or registrar's office.
  
  

Step 4. Receive money in your bank

• Most AMCs credit the redemption amount within 3–5 working days to your registered bank account.
• Payment is usually made through NEFT/RTGS/direct credit.

ELSS / Equity Mutual Fund Tax Rules in 2025

Based on updated rules effective from 23 July 2024, following are the tax rules of ELSS mutual funds:

1. Long-Term Capital Gains (LTCG) Tax

   • When you sell your equity mutual fund or ELSS units after 1 year, the gain becomes long-term.
   • You do not pay any tax on the first ₹1.25 lakh of LTCG in a financial year.
   • If your long-term gains go above ₹1.25 lakh, the extra amount is taxed at 12.5%.
   • These new LTCG rules apply only for units sold on or after 23 July 2024.
   • No indexation benefit is available for LTCG on equity funds.

2. Short-Term Capital Gains (STCG) Tax

   • If you sell your equity mutual fund or ELSS units before completing 1 year, the gain becomes short-term.
   • STCG on equity funds is taxed at 20% (for sales made on or after 23 July 2024).
   • Earlier, the STCG tax rate was 15%, but that applied only before 23 July 2024.

Summary of Latest ELSS Tax Rates in India in 2025

Should You Redeem Immediately After the Lock-In?

You don't have to redeem your ELSS units as soon as the 3-year lock-in ends. In many situations, holding your investment longer can be more beneficial.

• Equity usually performs better over the long term, so staying invested may help you earn higher returns.
• You can redeem your units in small parts to manage taxes more efficiently.
• If you want steady monthly income, you can set up an SWP (Systematic Withdrawal Plan).
• If your financial goal is still a few years away, it is better to stay invested instead of redeeming early.

Top ELSS Mutual Funds in 2025

Following are some of the best-performing ELSS mutual funds in India based on their latest returns and performance:

How to Calculate Your Returns on ELSS SIP Investments?

One effective method to determine the returns on your ELSS SIP investments is by using an SIP calculator. An SIP calculator is a financial tool that helps you estimate the future value of your investments made through SIPs. By using an SIP calculator, investors gain insights into the potential wealth accumulation from their ELSS SIPs, enabling them to make informed decisions regarding their investment strategies.

SIP Calculator

I know my investment amount I know my goal amount

Monthly SIP Yearly SIP Lumpsum

I want to invest Pro Tip

Financial experts suggest that a person should invest 10-15% of their monthly income for long-term financial growth

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I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

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Total Wealth ₹1.03 Cr

View Plans

I want to save

I want to invest for Pro Tip

Financial experts suggest that individuals should ideally invest for a period of 5 to 10 years, or even longer, to maximize the benefits of compounding and navigate market fluctuations effectively

Years

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Expected return Pro Tip

Top 25% of investors consistently generate more than 12% return

% Annually

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Monthly Investment ₹22.4 L

View Plans

Top Funds with High Returns (Past 7 Years)

13.24%

Equity Pension

15.49%

Global Equity Index Funds Strategy

19.07%

High Growth Fund

13.44%

Opportunities Fund

21.15%

Multi Cap Fund

14.53%

Accelerator Mid-Cap Fund II

15.89%

Multiplier

14.92%

Frontline Equity Fund

18.41%

Pension Mid Cap Fund

11.57%

Growth Plus Fund

14.8%

US Equity Fund

15.31%

Growth Opportunities Plus Fund

11.95%

Equity Top 250 Fund

14.36%

Future Apex Fund

12.28%

Pension Dynamic Equity Fund

14.68%

Pension Enhanced Equity

Things to Know Before Redeeming an ELSS SIP

Here are a few important points to keep in mind once your ELSS units complete the 3-year lock-in.

• There is no exit load after the lock-in, so you can redeem your units without any penalty.
• Your SIP will not stop automatically. You must cancel it manually if you no longer want to invest.
• You can set up an SWP to withdraw a fixed monthly amount from the units that have already completed the lock-in.
• You may reinvest the redeemed money into another mutual fund, depending on your financial goals.
• Ensure your KYC details are updated so that the redemption amount is credited smoothly to your bank account.

Conclusion

By understanding the redemption process and adhering to the lock-in periods associated with ELSS investments, investors can effectively manage their portfolios and achieve their financial goals with confidence.