Its a variety of diversified equity fund. You can make your investment tax deductible under Section 80C of the Income Tax Act.  The ELSS fund has a locking period of three years, its equipped with all other normal abilities of a equity fund. The investor also has the option to choose between growth and dividend options, and systematic investment plans (SIP). The dividends earned in this scheme ELSS are tax free. The returns at the maturity period is also tax free. The limit under Section 80C is for 1 lakh. The present situation is bad with ELSS too, since the stock market were beaten down negatively following the economic crisis. 

The returns with the ELSS before the fall of the markets was greater than any other tax saving option. ELSS is the best option for investors who are looking with a time frame of 3-5 years. The short term weakness in the market will glide down and will earn the investor with better returns in the long run. The performance and the ability of the stocks in the long run can never be beaten with any other financial instruments. The ELSS beats mostly all the equity based mutual fund schemes. It has a mandatory lock in period of three years. The minimum investment that can be made on ELSS is Rs.500 and multiples of it. The fund should be allotted to the investors to those who have applied with the prescribed form before March 31 every year. The plan would be open for a minimum period of three months. From the date of allotment the fund should be hold for three years. On the completion of the three years the investor gets the option to tender the units for repurchase. 

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