Is ELSS Mutual Fund returns totally tax free

Please note that ELSS Mutual Funds are equity funds only. In the last Budget (2018), following taxation was applied to equity mutual funds –

Long term capital gains – In case of equity or equity oriented mutual funds, the long term holding period is defined as more than one year. Long term capital gain at the rate of 10% was introduced in the last Budget provided the long term capital gain amount in a year is above Rs 1 Lakh. Therefore, the return on the ELSS fund can only be tax free if the gain made in a year is less than Rs 1 Lakh else tax at the rate of 10% will apply on the gain.

Dividends – In case of equity or equity oriented mutual funds, dividend distribution tax (DDT) at the rate of 10% was introduced. While the dividend received in the hands of the investor is totally tax free, the AMC (mutual fund company) has to pay the DDT and thus, it is a cost to the investor.

Please note that there is no discrimination between senior citizen and others as far as taxation on mutual funds is concerned.

Hope the above is helpful.