How to Redeem ELSS SIP?

Redeeming Equity Linked Savings Scheme SIPs require a clear understanding of the process and timing involved. ELSS SIPs offer tax benefits and potential long-term wealth accumulation, making them popular investment choices. However, knowing how to redeem ELSS SIPs efficiently is important for investors to access their funds when needed.

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SIP Benefits
Start SIP with as low as ₹1000
Start SIP with as low as ₹1000
No hidden charges
No hidden charges
Save upto ₹46,800 in Tax
Save upto ₹46,800 in Taxunder section 80 C
Zero LTCG Tax
Zero LTCG Tax^ (Unlike 10% in Mutual Funds)
Disciplined & worry-free investing
Disciplined & worry-free investing

  • Insurance Companies
  • Mutual Funds
Returns
Fund Name 3 Years 5 Years 10 Years
Top 200 Fund Tata AIA 25.81% 27.49%
21.65%
View Plan
Virtue II PNB Metlife 24.47% 23.35%
19.37%
View Plan
Pure Equity Birla Sun Life 21.79% 19.59%
18.46%
View Plan
Growth Opportunities Plus Fund Bharti AXA 17.41% 18.75%
18.22%
View Plan
Pure Stock Fund Bajaj Allianz 18.6% 17.6%
17.82%
View Plan
Blue Chip Fund HDFC Standard 12.63% 15.02%
15.28%
View Plan
Growth Super Fund Max Life 12.81% 15.16%
14.69%
View Plan
Equity Fund SBI 13.65% 15.04%
14.38%
View Plan
Multi Cap Growth Fund ICICI Prudential 14.97% 14.08%
14.17%
View Plan
Equity II Fund Canara HSBC Oriental Bank 12.23% 12.78%
12.45%
View Plan

Updated as on February 2024

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  Returns
Fund Name 5 Years 10 Years RSI
Active Fund QUANT 27.80% 23.96%
21.08%
Large and Mid Cap Fund QUANT 23.27% 22.69%
19.64%
Flexi Cap Fund PARAG PARIKH 23.90% 20.22%
20.15%
Large and Mid Cap Fund EDELWEISS 20.32% 18.01%
16.76%
Equity Opportunities Fund KOTAK 20.22% 18.98%
17.44%
Large and Midcap Fund MIRAE ASSET 21.11% 24.56%
23.01%
Flexi Cap Fund PGIM INDIA 21.48% -
15.13%
Flexi Cap Fund DSP 19.48% 17.73%
15.82%
Emerging Equities Fund CANARA ROBECO 18.91% 22.92%
20.84%
Focused fund SUNDARAM 18.22% 16.55%
15.16%

Updated as on March 2024

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What are ELSS Funds?

ELSS (Equity Linked Saving Scheme) is a type of fund that invests primarily in stocks (equity). It offers the dual benefit of potential for high returns and tax benefits. Investments in ELSS qualify for a tax deduction under Section 80C of the Income Tax Act in India, up to a limit of ₹1.5 lakh per year. ELSS funds have a lock-in period of 3 years, meaning you cannot withdraw your investment before that period.

You can invest in ELSS funds through SIP. This is a popular option as it allows you to benefit from the tax advantages of ELSS while also leveraging the benefits of SIP, such as rupee-cost averaging and disciplined investing.

How Can You Redeem Your Investments In ELSS?

Investing in Equity Linked Savings Scheme (ELSS) funds offers tax-saving benefits and potential returns. Redeeming your ELSS funds involves simple steps:

For Lump Sum Investments:

  • Contact Fund House: Reach out to the fund house where you invested.

  • Submit Redemption Form: Fill out the form accurately, specifying the redemption amount.

  • Verification and Timeline: The fund house will verify your request and credit the redemption amount to your bank account within 3-7 working days.

For SIP Investments:

  • Review SIP Terms: Understand the lock-in period and terms associated with your SIP investments.

  • Stop SIP and Redeem: Contact the fund house to stop further SIP instalments and redeem existing units.

  • Follow Redemption Process: Submit the necessary documents and follow the redemption process outlined by the fund house.

How to Redeem Lump Sum Investments From ELSS?

Redeeming lump sum investments from Equity Linked Savings Schemes (ELSS) involves a simple yet time-sensitive process. Once you invest a lump sum amount in an ELSS, the lock-in period begins from the date of purchase. In practical terms, this means you can only sell your ELSS units after a period of 3 years from the investment date.

Illustration

Suppose you invest Rs. 10,000 in an ELSS scheme on 10th March 2024. The lock-in period for this investment ends on 11th March 2027, exactly 3 years from the date of your initial investment.

How to Redeem SIP Investments From ELSS?

ELSS (Equity Linked Saving Scheme) funds offer tax benefits but come with a mandatory lock-in period of 3 years. This applies to each individual SIP instalment, not the entire SIP itself.

Here's how to redeem your SIP investments from an ELSS fund, with an example:

Check the Lock-in Period:

  • Each SIP instalment has a separate lock-in period starting from its investment date.

  • You can't redeem any units before 3 years from the date of each instalment.

Example:

  • Let's say you started an SIP of Rs. 5,000 in an ELSS fund on January 1, 2021. This installment can be redeemed after January 1, 2024.

  • Similarly, the SIP instalment invested on February 1, 2021, can be redeemed after February 1, 2024, and so on.

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.

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.

FAQ's

  • Am I required to redeem my ELSS units once the lock-in period ends?

    No, the redemption of ELSS units post-lock-in period is not mandatory. ELSS funds transition into open-ended schemes with full liquidity after three years, offering the flexibility to continue holding or redeem based on your financial objectives.
  • What happens if I don't redeem my ELSS units after the lock-in period?

    Your ELSS investment remains unaffected if you choose not to redeem after the lock-in period. It continues to be subject to market fluctuations, with gains taxed according to regulations upon future redemption.
  • Is it advisable to redeem my ELSS after the lock-in and reinvest in another ELSS for tax benefits?

    While redeeming and reinvesting in another ELSS for tax benefits is an option, consider your financial goals and existing fund performance. Ensure such actions align with your overall investment strategy and risk tolerance.

+For Mutual Fund midcap category Returns https://www.morningstar.in/tools/mutual-fund-category-performance.aspx & for Insurance midcap fund category Returns- https://www.morningstar.in/tools/insurance-fund-category-performance.aspx
*Past 10 Year annualised returns as on 01-12-2023
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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