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    Question

    Consider the following statement about Equity Linked Savings Scheme?

                          I.        It is a type of diversified equity scheme.

                        II.        It have a lock-in period of three years.

                       III.        It is offered by Bombay Stock Exchange in India.

    Which of the above statement is/are incorrect?

    A Only I Correct Answer Incorrect Answer
    B Only II Correct Answer Incorrect Answer
    C only III Correct Answer Incorrect Answer
    D Both I and II Correct Answer Incorrect Answer
    E Both I and III Correct Answer Incorrect Answer

    Solution

    An Equity Linked Savings Scheme, popularly known as ELSS, is a type of diversified equity scheme which comes, with a lock-in period of three years, offered by mutual funds in India. They offer tax benefits under the Section 80C of Income Tax Act 1961. SEBI recently allowed mutual funds to launch passively managed Equity-Linked Savings Schemes (ELSS). However, it said that mutual funds can have either an actively-managed ELSS scheme or a passively-managed one but not in both categories. The passive ELSS scheme should be based on one of the indices comprising equity shares from top 250 companies in terms of market capitalisation, SEBI said in a circular. Besides, SEBI has put in place a framework for managing passive funds — Exchange Traded Funds (ETFs) and Index Funds.

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