How to redeem ELSS/ Tax Saving Fund before 3 years?

I found this intersting Question and the corresponding answer on Business Standard & ValueResearchOnline

I had invested in ELSS (equity linked savings scheme) funds one year before, but I have not claimed this investment while filing for return. Can I withdraw from the ELSS, though the three-year lock-in is not complete?

ELSS are tax-saving funds, with a lock-in period of three years that allow investors tax deduction of investment up to Rs 1 lakh. One should plan out these investments, rather than investing at a whim. You can withdraw your investment if you are able to secure a certificate from the income tax department that you haven’t made a claim against this investment.

I don’t know How true it is? But it comes from a very respectable newspaper. As far as I know ELSS products are so designed that money cannot be withdrawn from them under any circumstances before completion of 3 year locking period.


I found another link of Tata Mutual Fund – whcih says ELSS cannot be withdrawn before 3 years.

Chintan: Can I redeem my investment before the lock-in period ends? Is there any liquidity option in ELSS investments?

Gynanesh: No. The amount cannot be withdrawn before the end of the lock-in period. However, ELSS is definitely beneficial as compared to other tax-saving instruments, as the lock-in period is just 3 years compared to the maturity period of NSC (6 years) and PPF (15 years) respectively. Premature withdrawal from other tax saving instruments may be allowed on specific conditions.

The earning potential of ELSS is high, although at a relatively higher risk. You can opt for the dividend option in ELSS; dividends are tax-free, thus ensuring some liquidity and the opportunity to book profits during the lock-in period.

I really don’t know which one is right! 

Readers if you have any similar experience or any know how about the same please let others know through comments.

2 thoughts on “How to redeem ELSS/ Tax Saving Fund before 3 years?”

    1. ELSS or Tax saving mutual fund can be withdrawn only after completion of 1 year of investment even if the person who invested has died. You should contact respective mutual fund company for the same.

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