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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Scheme Related Information

Which feature is true of an Equity Linked Savings Scheme (ELSS)?

An ELSS has a statutory lock-in of 3 years from the date of allotment of each unit. It is an equity-oriented scheme eligible for tax deduction under the old regime, so units cannot be redeemed before the lock-in ends.

  1. AUnits can be redeemed at any time without restriction
  2. BIt has a statutory lock-in period of 3 yearsCorrect
  3. CIt has a lock-in period of 5 years
  4. DIt invests only in government securities

Explanation

ELSS units carry a mandatory lock-in of 3 years from the date of allotment of each investment, and the scheme is predominantly equity-oriented. Hence unrestricted redemption, a 5-year lock-in or government-securities-only investing are all incorrect.

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