Since ELSS mutual funds are a type of equity funds, they are taxed like an equity fund.
1. No short-term capital gains as there is a mandatory lock-in period of three years.
2. Gains arising from ELSS investment are taxed as Long Term Capital Gains. The long-term capital gains of up to Rs 1 lakh a year are tax-exempt. Any long-term gains exceeding Rs 1 lakh are taxed at a rate of 10%