Income Tax Benefit: Investments made in ELSS plans are entitled for deduction from the taxable income under Section 80C of the Income Tax Act.
There is no limit for investments in ELSS plans, but investments of up to Rs. 1,50,000 qualify for income tax benefits. Investments made in standard mutual funds (other than ELSS plans) do not qualify for income tax deduction.
3 Year Lock-in Period: Investments made in ELSS plans have a lock-in period of 3 years which inculcates a long-term investing discipline. This lock-in period is not available in the case of standard mutual funds.