April 06 , 2013
Tax saver mutual funds ELSS have a lock-in period. Lock-in period means you cannot redeem units bought in the fund before completing the period. There are a number of websites giving both yes and no answers.
The fact is all ELSS funds have a statutory lock-in period of 3 years. Irrespective of whether you invest in the fund for tax saving or not you must abide by the lock-in period requirement. In case it is an SIP then each installment of investment must complete 36 months. For instance if you had invested Rs 3,000 every month in a tax saver ELSS from Jan 2012 to Dec 2012 then in Jan 2015 you can withdraw only Rs 3,000. In Feb you can withdraw Rs 6,000, in March Rs 9,000 and in Dec 2015 you can withdraw the entire investment of Rs 36,000.
Obviously, this is not to say you must rush to exit your investment as soon as the lock-in period ends. If it is a good fund, stay as long as you don't require the money. If it is not, you can consider moving to the top diversified mutual funds after the lock-in period.
Apart from ELSS funds closed-ended mutual funds also have lock-in period.