New Delhi: The growing adoption of the new income tax regime has changed how investors view Equity-Linked Savings Schemes (ELSS). While ELSS funds continue to deliver market-linked returns like other equity mutual funds, the tax incentive that once made them popular has reduced significantly for taxpayers who opt for the new regime.

Under the old tax regime, investments in ELSS qualify for a tax deduction of up to Rs 1.5 lakh under Section 80C, making them a widely used tax-saving instrument for salaried individuals. However, the new tax regime does not allow Section 80C deductions, which means ELSS investments no longer provide direct tax-saving benefits for those choosing the simplified tax structure.

Financial planners say the decision to invest in ELSS should now depend more on long-term investment goals rather than tax savings alone. ELSS funds remain equity-oriented mutual funds with a three-year lock-in period, offering potential wealth creation through stock-market exposure.

For investors who continue to follow the old tax regime, ELSS can still be a useful tool for reducing taxable income while building long-term equity investments. But for those who have shifted to the new tax regime, experts suggest choosing equity mutual funds based on risk appetite, time horizon, and financial goals instead of tax benefits.

In short, ELSS is gradually moving from being a tax-saving necessity to a pure investment choice, especially as more taxpayers adopt the new tax regime and focus on simpler tax structures.