Lock-in Period
A lock-in period refers to the minimum duration for which funds are restricted from redemption or withdrawal under the terms of an investment product or its governing regulation.
Lock-in Periods Across Products
| Product | Lock-in | Notes |
|---|---|---|
| ELSS | 3 years | Shortest among 80C instruments; each SIP instalment has its own 3-year lock-in |
| PPF | 15 years | Partial withdrawals from Year 7; premature closure after 5 years with penalty |
| NPS Tier I | Until age 60 | Partial withdrawals after 3 years for specified purposes |
| Tax-saving FD | 5 years | No premature withdrawal |
| ULIPs | 5 years | IRDAI mandate |
| SGBs | 8 years (maturity) | Early exit from 5th year on coupon dates |
| SCSS | 5 years | Premature closure with penalty after 1 year |
ELSS SIP Lock-in
For ELSS SIP investments, each monthly instalment carries an independent 3-year lock-in from its allotment date. An April 2024 instalment unlocks in April 2027; May 2024 in May 2027, and so on.
Consequences of Pre-mature Exit
Depending on the product: penalty charges may be levied; tax benefits may be reversed (e.g., 80C deduction clawed back if tax-saving FD is broken); or withdrawal may be legally prohibited (ELSS, NPS Tier I).
Lock-in vs. Exit Load
An exit load is a charge on early redemptions but does not legally prevent withdrawal. A lock-in imposes either a legal restriction or severe penalty on pre-term access. They serve different purposes.