Tax Savings: ELSS funds are the only sort of Mutual Funds that qualify for annual tax deductions of roughly Rs 1.5 lakh. Tax deductions on these monies are permitted under Section 80C of the Income Tax Act.
Even with the new tax law, which makes long-term capital gains from ELSS funds over Rs 1 lakh taxable, these funds remain one of the best ways to reduce your tax burden. Compared to alternative investments like Unit Linked Insurance Plans (ULIPs) or Public Provident Fund, these provide better post-tax returns (PPF).
Short lock-in period: Unlike other investments like the Public Provident Fund, Employees Provident Fund, and National Savings Certificates, which have a minimum lock-in period of five years, ELSS funds are locked in for only three years after your initial commitment.
Can offer long-term return: By holding onto your money after the three-year lock-in period, you can grow your money. Over time, significant wealth can be generated as a result of these funds' investments in shares.
Develops the habit of saving: The Systematic Investment Plan, commonly known as the ELSS, allows you to invest a minimum of 500 rupees monthly (SIP). Thus, you can see your money increase by making the least monthly investments.
Higher returns: Since these funds invest in stocks, the market offers them higher returns. Your returns from ELSS funds may be twice as high as those from a straightforward savings plan. According to statistics, ELSS produces, on average, 12% returns over 10 years. Compared to programmes like PPF, which generate about 8%, this represents a huge boost.

The shortest lock-in period among all the permitted investment alternatives is three years, which applies to ELSS. ELSS investments are subject to the lock-in period from the date of investment and cannot be withdrawn until the three-year period has passed.

Most investors purchase ELSS near the end of the fiscal year to reduce their tax burden, although this may not be the best course of action. Tax savings are crucial when investing in these funds, but they shouldn't be the primary driver. 
Investments made with a long-term perspective are the most effective strategy to maximise returns from these funds. Decide on your investment goals at the start of the year and use SIPs to make the necessary investments. Regularly investing throughout the year might lessen your exposure to market volatility and gradually increase your wealth.

The capital gains that ELSS funds offer are taxed. Since ELSS funds have a three-year lock-in period, only long-term capital gains may be realised. These gains, which can total up to Rs 1,00,000 annually, are now tax-exempt. Payments over this threshold are not subject to indexation and are instead subject to a 10% tax rate.
All mutual fund schemes offer dividends, which are all taxed traditionally. In other words, dividends are added to your total income and taxed at the rate specified in your income tax slab. Dividends are tax-free in the hands of investors until Budget 2020 since firms pay dividend distribution tax (DDT).