Equity-Linked Savings Scheme (ELSS) is a type of equity fund and the only mutual fund scheme which qualifies for a tax deduction of Rs. 1.5 lakh per annum under Section 80C of the Income Tax Act. An ELSS comes with a lock-in period of 3 years which means an investment made in it cannot be withdrawn before 3 years. Schemes other than equity-oriented schemes are treated in the debt category for tax purposes. In addition to the tax benefits investing in ELSS funds, you also get to enjoy tax-free dividends. Mutual Funds pay out dividends to investors on a regular basis.The best part about this benefit is that there is no maximum limit on the dividend amount for exemption.