Should You Continue Investing in ELSS Funds After Budget 2025-26?

📈 The Union Budget 2025-26 has brought significant changes to the tax structure, raising concerns about the future of Equity Linked Savings Schemes (ELSS) as a tax-saving investment. If you are currently investing ₹2,500 per month in ELSS through SIP (Systematic Investment Plan), here’s what you need to know before deciding whether to continue or stop.

Key Budget 2025-26 Tax Changes Affecting ELSS Funds

New Tax Regime Gains More Traction
- No income tax up to ₹12 lakh (₹12.75 lakh with a standard deduction).
- More taxpayers shifting to the new tax regime, reducing the demand for ELSS.
Falling Demand for ELSS Investments
- Since the new regime doesn’t offer Section 80C deductions, fewer investors will opt for ELSS funds.
- As a result, ELSS fund performance may decline over time due to reduced inflows.

Should You Stop Your ELSS SIP?

✔ If your ELSS funds have completed the 3-year lock-in period:

Consider redeeming and switching based on your risk appetite.

✔ For Low-Risk Investors:

Shift to Large Cap Funds, Multi-Cap Funds, or Flexi-Cap Funds for stable growth.

✔ For High-Risk Investors (with a 5 to 7+ year horizon):

Invest in Large & Mid-Cap Funds or Mid-Cap Funds for higher returns.

Final Verdict

With the new tax regime reducing the relevance of ELSS funds, investors must evaluate their portfolios carefully. If tax-saving was your primary reason for investing in ELSS, consider switching to better-performing equity funds that align with your financial goals.

🔹 Tip: If you prefer flexibility and long-term wealth creation, explore diversified equity mutual funds beyond ELSS.

💡 Want expert guidance on portfolio restructuring? Consult a certified mutual fund distributor to make the best decision! 🚀

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