ELSS or Equity Linked Saving Scheme is basically a tax saving mutual fund scheme that allows an investor to take advantage of Section 80C of the Income Tax Act 1961 and save taxes. When it comes to investing in ELSS, one needs to go through a lock-in period of three years and also accomplish a tax reduction of up to Rs 1.5 lakh. If you are planning to generate funds in the long term and also save taxes at the same time, then ELSS is one of the best options out there. In addition to that, if you are opting for ELSS then you will be able to avoid the troubles of last-minute tax planning. It allows you to choose a monthly SIP and save up to Rs. 46,800 (taxes) on a yearly basis. However, the majority of people do not exactly know how to invest in ELSS funds.

Here are some steps that you should learn in order to know how to invest in ELSS:

• Fill up the form: This is the primary step of knowing how to invest in ELSS. The investor can invest either directly or via a mutual fund advisor. The investor needs to download an application form that can be obtained from the mutual fund website. If that is not possible for some reason then he can get it from the AMC (asset management company ) or distributor.
• Complete the process of KYC: KYC is the next elementary requirement when it comes to investing in mutual funds and it is mandatory for ELSS as well. The person needs to complete an in-person verification process and also submit proof of identity and proof of address before investing.
• Keep hold of the records: Once you have completed the process of investment, a statement of account is generated and is sent by the AMC. This can be kept by the investor as a record, which can be used for tax purposes in the future. This statement can be very useful for those who do not know how to invest in ELSS.

• Invest the permitted amount: One can not invest the desired amount when it comes to investing in ELSS as there is a fixed minimum sum requirement. When it comes to the minimum amount, one needs to invest at least Rs. 500. However, there is no specified maximum amount when investing in ELSS. Having said that, the tax deduction will only be offered up to Rs 1.5 lakh or the amount the investor has provided in the financial year (if that is lower than Rs 1.5 lakh).
• Mode of investing: If you do not know how to invest in ELSS then you should be clear with the fact that there are only two ways through which you can invest. Firstly, you can invest a lump sum amount of money and lastly, you can select the method of systematic investment plan (SIP). In the case of SIP, a specified amount of money will be deducted from your bank account on a monthly basis and the same will be invested in the selected scheme.

If you have no clue on how to invest in ELSS then you should follow the steps mentioned above. Investing in ELSS can be a great option no matter if you are investing a lump sum amount or through SIP as it helps you in saving a lot of money that would have gone otherwise in taxes. Before investing in ELSS, you should be aware of the fact that this scheme is prone to market ups and downs. So you should invest sensibly and if you are a novice then consulting professionals will be a very good idea. In addition to that, as you need to hold ELSS for three years, it is bound to long term capital gains, which are taxable at 10 per cent.