Deduction u/s 80c for investment in mutual fund

This query is : Resolved 

Querist : Anonymous (Querist) 12 January 2012

Is deduction u/s 80C available for purchase of units of ANY and ALL mutual funds?

If no, kindly tell me investment in which mutual fund is eleigible for deduction u/s 80C.

As per Section 80C, investment as subscription to any units of any Mutual Fund referred to in clause (23D) of section 10 is eligible for deduction.

Section 10(23D) specifies:

(i) a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or regulations made thereunder;

(ii) such other Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf.]

Going by the above, investment in ALL mutual funds should be eligible for deduction u/s 80C.

Kindly clarify.

Neha Jain (Expert)
12 January 2012

Mutual Funds have got different schemes for investment.

If you invest in ELSS scheme with lock in period of 3 years then only u can avail exemption u/s 80C otherwise investment in mutual fund is not deductible.

Querist : Anonymous (Querist) 13 January 2012

Ms. Neha, thanks for the reply.

However, can you provide me the source of your reply.

Where exactly does it say in the Act that only investment in ELSS scheme with lock-in period of 3 years only is eligible for deduction.

Please reply.

Neha Jain (Expert)
13 January 2012

Subscription towards notified units of Mutual fund is eligible for deduction u/s80C. Also refer section 10 (23D) which specifies that CG by notification in official gazatte specify mutual fund eligible for deduction u/s 80C.

Consult your investment advisor he will tell you presently what are the tax saving schemes in which you can invest for claiming deduction.


Querist : Anonymous (Querist) 16 January 2012

Ms. Neha, I have quoted Section 80C and Section 10(23D) from the Act itself.

Section 10(23D) specifies 2 types of mutual funds.

1. Mutual Fund registered under SEBI Act
2. Such other mutual fund as may be notified.

Kindly provide me the source where it is written that investment in ELSS scheme only is eligible for investment.

Any notification/circular.

Neha Jain (Expert)
16 January 2012

Tax saving mutual fund in common parlance are referred as ELSS (Equity Linked Saving Scheme) by investors. Statutorily they are known as TAX SAVER MUTUAL FUND.

CA Punit GoSwaMi (Expert)
22 December 2015

Section 10(23d) Says,
- Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf;

[The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]

The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.

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