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What is the penalty for withdrawing from ELSS before 3 years?

I am investing in ELSS for tax benefits. It says there is a lock-in of 3 years. If I have an emergency and need to withdraw money, what will be the penalty?

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3 Approved Answers

Tanya

Equity Linked Saving Scheme (ELSS) has a lock-in period of 3 years. The amount invested cannot be withdrawn before the completion of this lock-in period.

An ongoing SIP in ELSS can be stopped. However, redeeming the invested amount before the completion of 3 years is not possible in the case of ELSS.

Mridul Agrawal

Equity Linked Savings Scheme or ELSS is a type of mutual fund wherein a major portion out of the total fund is invested in equity and related products. As evident from the name of the scheme, it comes with a benefits attached to it, in the form of tax savings.

Two important features of the ELSS scheme are lock-in period and Net Asset Value (NAV) or price of the fund which is declared at the end of each business day.

Lock- in period – Unlike other mutual fund schemes, ELSS is different from the sense that there is a minimum lock-in period of 3 years in any/all ELSS schemes. Under ELSS schemes, premature withdrawal is not allowed before the completion of lock-in period. 

As mentioned ELSS funds cannot be withdrawn before a lock-in period of 3 years, therefore the option of premature withdrawal is not available to the investor, thereby no penalty is possible in this case.

Ishan

ELSS investments are locked-in for 3 years. So, you can't withdraw it before 3 years under any circumstances. 

Check this for more details on ELSS: https://groww.in/blog/understanding-elss-mutual-funds/

If you really need money, you can take loan with mutual funds units as lien.

Hope this helps

Ishan

Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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