n NISM Certifications
V-A NISM Series V-A
Medium

Identify the TRUE statement with respect to Equity Linked Savings Scheme (ELSS). (A) In an ELSS - Income Distribution and Cash Withdrawal (IDCW) option - Reinvestment Plan, there would be no lock-in for the units acquired on account of IDCW (B) In an ELSS - Income Distribution and Cash Withdrawal (IDCW) option - Reinvestment Plan, the units acquired on account of IDCW would have a three-year lock-in from the date of allotment (C) In an ELSS - Income Distribution and Cash Withdrawal (IDCW) option, no dividends can be paid due to the three-year lock-in period

Practice question from NISM Series V A - Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Only A is true

  2. Only B is true

    Correct answer

  3. C

    Only C is true

  4. D

    All A, B, and C are true

Why this is the answer

In the IDCW option of ELSS, the units acquired on reinvestment of dividends also attract the three-year lock-in period, just like the original investment. This lock-in applies from the date of allotment of units.

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