Why SIP instalments in ELSS lock in one at a time
The instalment-by-instalment lock-in mechanic, explained with a timeline.
ELSS is often described as having “a 3-year lock-in,” which makes it sound like a single countdown that starts the day the investment begins. For a SIP, that’s not how it works at all — there are as many lock-in clocks as there are instalments.
Every instalment starts its own 3-year clock
Each monthly SIP instalment is treated as its own separate investment, with its own independent 3-year lock-in beginning from its own investment date — not from when the SIP itself started. The instalment from month 1 clears its lock-in long before the instalment from month 40 does, even though both belong to the same ongoing SIP.
Project your tax-saving mutual fund's returns and lock-in maturity value.
The timeline for a 5-year SIP, worked through
Take this calculator’s own default — ₹12,500/month for 5 years (60 instalments) — and track a few points along that timeline.
Unlocks at month 37 — year 3.08, right on schedule for a standalone 3-year lock-in.
Unlocks at month 60 — exactly year 5, the same moment the SIP itself finishes. Every instalment made in the first two years is already individually clear by the time the last contribution goes in.
Doesn’t unlock until month 96 — year 8. The full SIP, all 60 instalments, only becomes entirely liquid three years after the last rupee was invested.
Stretch the same ₹12,500/month SIP to 10 years of contributions instead, and the same pattern holds: the last instalment doesn’t clear until year 13, three years past the final contribution, whatever that final year happens to be.
What this means for planning around the money
A 5-year ELSS SIP intended to fund a goal exactly 5 years out doesn’t actually deliver a fully liquid corpus at that point — roughly the newest 3 years’ worth of instalments are still locked, stretching genuine full liquidity out to year 8. In practice, redemptions are processed against a SIP’s oldest, already-unlocked units first, so an investor isn’t forced to wait for every single instalment to individually clear before touching any of it. The newest contributions specifically remain off-limits until their own 3-year mark passes, same as any other instalment. Worth factoring the instalment-by-instalment schedule into the actual date money is needed, not just the headline “3-year lock-in.”
All figures are indicative and for educational purposes only — not financial advice.
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