I am not able to redeem all units in ELSS Scheme??

Query of Blog Reader

I have invested in  SIP in Franklin India Tax Shield Fund Dividend Reinvestment option, Now i want to redeem all units, but i am unable to redeem my complete units after three years as fund house says that the units are under Lock in Period? why is this So? Please help to solve this query.

   

As you mentioned above that you invested in Franklin India Tax Shield Fund.Franklin India Tax Shield Fund is ELSS Fund (Equity Linked Savings Scheme).

Investment made under Franklin India Tax Shied qualify for tax benefit under section 80C of income tax act and all subscription in Franklin India Tax Shield are Subject to lock in period of three years from the date of allotment and unit holder can't reedem, transfer, assign or pledge units during the period.

When an investment is made in a tax-saving ELSS scheme through SIP, each SIP instalment is treated as a fresh investment and the units are locked for three years, as per the guidelines governing ELSS. Each SIP investment has to complete the compulsory three-year lock-in. 

 

Same rule applies to dividend which is reinvested, it is also considered as Fresh Purchase being made by you.

So, you can't reedem all units, but only which completed 3 years, But as you chosen dividend reinvestment that also results in fresh purchase and lock in,  you can avoid that by changing the dividend option.

The best option for this is to apply for Change in dividend option from Dividend Reinvestment to Dividend Payout. For this you have to send a simple signed written request with your Folio(Account Details).

If you have online access to your Franklin Investment, the option to change is also available under Profile.

 You can also Refer this How lock in works in ELSS Funds...

Explain Lock in Period if investment is in ELSS Funds Through SIP (Systematic Investment Plan)

Form for change of Dividend option from Dividend reinvestment to dividend payout, (use switch option)

Infact they would have provided option of change of Dividend, but switch request will also get accepted...(means switch from Franklin India Tax shield Dividend Reinvestment to Franklin India Tax shield Dividend Payout)