Lock-In Period

Investments

Lock-in period is the mandatory holding period during which an investment cannot be redeemed. ELSS: 3 years. PPF: 15 years (partial withdrawal from year 7). NPS: until age 60. Tax-saving FD: 5 years.

In detail

Lock-in periods by instrument:nELSS mutual fund: 3 years (each SIP instalment separately)nPPF: 15 years (partial withdrawal allowed from year 7, loan facility from year 3)nTax-saving FD: 5 years (premature withdrawal usually not allowed)nNSC: 5 yearsnNPS: until age 60 (early exit possible with annuity conditions)nIPO lock-in for promoters: 3 yearsnnFor ELSS SIP: if investing Rs 5,000/month, each monthly instalment has its own 3-year clock. First instalment can be redeemed after 3 years, but last instalment only after its own 3 years.

Real-life example

🇮🇳 India example

Kavita starts Rs 5,000/month ELSS SIP in January 2022. January 2022 units: redeemable from January 2025. December 2022 units: redeemable only from December 2025. She cannot redeem all units at once after 3 years from start -- each SIP instalment has its own 3-year clock.

Frequently asked questions

Can I break a tax-saving FD early? ▼

Most banks do not allow premature withdrawal of 5-year tax-saving FDs. A few allow it with a penalty and clawback of 80C tax benefit. Unlike regular FDs, tax-saving FDs have strict lock-in.