Several tax savings ELSS mutual funds are available in the market, offering a suite of benefits. However, selecting the best tax saving ELSS mutual funds in India may be difficult. While some may take experts’ opinions, others like to make their way.
That’s why to make your selection process simple, we’ve listed the top 15 best tax saving ELSS mutual funds in India. This article will take you through some of each ELSS mutual fund’s rankings, holding details, and tax-saving details.
At the end of this article, we have answered a few questions people commonly ask about ELSS mutual funds. Let’s begin!
Top 15 Best Tax Saving ELSS Mutual Funds
In this article
Before you select a fund, you must compare different parameters of available funds. Additionally, each investment depends on an individual’s financial goals, risk appetite, and investment horizon. The below shows the rank of each ELSS mutual fund as per 5Y annualized return.
Note: Rank stated in the table above are subject to change.
1. SBI Tax Advantage Fund – Series II – Growth Tax Saving ELSS Mutual Fund
This fund is placed at the top of the list of best tax-saving elss mutual funds in India. The fund size is tiny at only Rs. 21.95 Cr. Also, the number of stocks in the portfolio is only 31.
SBI Tax Advantage Fund – Series II – Funds Attributes
2. SBI Tax Advantage Fund Series III Regular Plan-Growth – Tax Saving ELSS Mutual Fund
This fund is in the second position among the best tax saving elss mutual funds in India. However, the absolute fun size is relatively small, and also the expense ratio is on the higher side.
SBI Tax Advantage Fund Series III Regular Plan – Funds Attributes
3. Quant Tax Plan-Growth – Tax Saving ELSS Mutual Fund
Next on the list of the best tax saving ELSS mutual funds in India is Quant Tax Plan-Growth. It is placed in the third position even though the fund size is even smaller than SBI.
Quant Tax Plan-Growth- Funds Attributes
4. Motilal Oswal Long Term Equity Fund-Growth – Tax Saving ELSS Mutual Fund
This fund is placed at the fourth position of the best tax saving ELSS mutual fund in India. The fund size is relatively healthy. Also, the fund is almost fully invested with tiny cash holding.
Motilal Oswal Long Term Equity Fund-Growth- Funds Attributes
5. Axis Long Term Equity Fund-Growth Tax Saving ELSS Mutual Fund
This fund is at the fifth place among the best tax saving ELSS mutual fund in India. The fund size is relatively large. Also, the significant investment is in the large-cap space.
Axis Long Term Equity Fund-Growth – Funds Attributes
6. DSP Tax Saver Fund – Regular Plan-Growth – Tax Saving ELSS Mutual Fund
This fund is at the sixth place among the best tax saving elss mutual fund in India. The primary point to note here is that the fund holds a relatively high number of stocks at 64.
DSP Tax Saver Fund – Regular Plan – Funds Attributes
7. Tata India Tax Saving Fund – Regular Plan-Growth – Tax Saving ELSS Mutual Fund
This fund is at the seventh place among the best tax saving ELSS mutual fund in India. The fund has more than 3/4th of its investment in large-cap stock.
Tata India Tax Saving Fund – Regular Plan -Funds Attributes
8. Aditya Birla Sun Life Tax Relief 96 – Regular Plan-Growth Tax Saving ELSS Mutual Fund
This fund is placed in eighth place among the best tax saving ELSS mutual fund in India. It is the oldest ELSS fund of India and holds around 40 stocks lower than the category average.
Aditya Birla Sun Life Tax Relief 96 – Regular Plan Funds Attributes
The fund is placed in the ninth position among the best tax saving elss mutual funds in India. This fund is well diversified into the equity space withholding across all market capitalization.
Canara Robeco Equity Tax Saver – Regular Plan Funds Attributes
10. BOI AXA Tax Advantage Fund – Regular Plan-Growth Tax Saving ELSS Mutual Fund
This fund is placed at the 10th position among the best tax saving ELSS mutual fund in India. This fund is suitable for optimistic about the mid-cap and small-cap space over the large-cap space.
BOI AXA Tax Advantage Fund – Regular Plan Funds Attributes
11. Invesco India Tax Plan-Growth Tax Saving ELSS Mutual Fund
This fund is placed at the 11th position among the best tax saving ELSS mutual fund in India. This fund has a moderate-sized, but the expense ratio is more than the category average.
Invesco India Tax Plan-Growth Funds Attributes
12. Aditya Birla Sun Life Tax Plan – Regular Plan-Growth
Next on the list is placed at the 12th position. This fund should be preferred by those investors who are not optimistic about the small-cap space as it has minimal exposure to the small-cap stock.
Aditya Birla Sun Life Tax Plan – Regular Plan – Funds Attributes
13. SBI Long Term Advantage Fund – Series II – Regular Plan-Growth
The next on the list is placed in the 13th position. This fund takes a conservative approach to the current market situation as it has a relatively large cash holding.
SBI Long Term Advantage Fund – Series II-Funds Attributes
This fund is placed at the 14th position among the best tax saving ELSS mutual fund in India. This fund gives more weightage to the large-cap and mid-cap space as compared to the small-cap space.
Kotak Tax Saver Scheme – Growth Funds Attributes
15. Principal Tax Saving Fund Tax Saving ELSS Mutual Fund
This fund is placed at the 15th position among the best tax saving ELSS mutual fund in India. This fund has a large number of stock and also is majorly invested in the large-cap space.
ELSS Suitability: If you are looking to invest funds for at least three years and looking for additional income tax-saving benefits, ELSS is the best option. Additionally, you must note that you must be ready for a possibility of moderate losses in the investments and three year lock-in period.
Alternatively, if you invest for at least five years, you can expect better returns, which can beat the inflation rate and are higher than fixed income options in the market. Also, by investing in an ELSS, you can get a total deduction of up to Rs. 1.5 Lakh in one financial year. However, it should be taken into consideration that an ELSS is not a fixed income instrument. The investment value can fluctuate, and also there is a lockin period of 3 years. To smoothen out the fluctuation in investment value, the SIP route can be used.
Investment Tip
If you want to redeem your investment before completing five years, we recommend you do not invest in ELSS mutual funds.
Capital Gains Applicability On ELSS
If an Escheme’s uni theme is redeemed from the given AMC, gains of up to Rs. 1 Lakh are totally tax-exempt in a financial year.
If the gains exceed Rs. 1 Lakh in a financial year, they are taxed at a flat rate of 10%
Zero tax is charged as long as the units are not sold.
Dividends Tax on ELSS
The AMC’s dividend distribution tax is payable at the rate of 10% (effectively 11.648%, including surcharge and cess). The AMC pays this tax at the source, and the dividend received by the investor is net after this tax.
Frequently Asked Questions
Q: Who must invest in ELSS Mutual Funds?
A: Anyone can invest in ELSS Mutual Funds. You can be an individual or a HUF. If you carry enough knowledge and are ready to bear the risks and look for a long term goal, the ELSS Mutual Fund is a great option.
If you are starting in the early years of your age, you can invest for the long term since you have time to unleash the power of compounding. This way, you can enjoy high returns, further saving on taxes of up to Rs. 46,800 a year.
Q: What benefits can I expect with ELSS Mutual Funds?
The lock-in period in ELSS Mutual Funds is the shortest of all the Section 80C avenues. The maximum amount one can invest in 1 financial year Rs.1, 50,000 It has the potential to offer much higher returns compared to other available tax saving options. You are taxed only at 10% of the gains.
What kind of options are available for investing in ELSS Mutual Funds?
1. Dividend Option In the divided option, you can get timely benefits in the form of dividends. These are entirely tax-free. Additionally, the dividend is declared only when there are additional profits. Dividend Reinvestments Option In the Dividend Reinvestments Option, you reinvest the dividends received, adding to the NAV. This is said to be a good option, especially when the market is playing well is believed to remain well.
2. Growth Option In the Growth Option, you will not receive profits in the form of dividends. You get benefits at the time of redemption. This further helps to appreciate the total NAV multiplying the profits. Since the market may not work in your favor always, the returns are subject to market risk.
Q: How can I evaluate between various ELSS Mutual Funds?
Compare the Fund Returns You can compare the fund’s performance with the peer competitors to check the fund’s consistency over the years. You can check the consistency between 5-10 years. The performance of the fund is reflected based on stock quality. In case the fund outperforms or the performance of the stocks are higher, then the fund may deliver high returns. Expense Ratio The expense ratio depicts the amount of investment that goes towards managing the fund. Generally, higher take-home returns are seen on a lower expense ratio. Hence, it is recommended that you select a fund that has a lower expense ratio. Financial Parameters You must consider Alpha & Beta to analyze the performance, Standard Deviation, Sharpe ratio, and Sortino ratio. There is a risk in a fund having a higher standard deviation than a fund having a lower deviation. You must select a fund having a higher Sharpe Ratio since the returns are high for every additional risk you take.
Nihar began his career as an IT-developer for the credit card payment systems domain, where he gained exposure to the inner workings of the payment system. This was where he gained an interest in finance. And as a finance enthusiast, he started to learn more about it. He not only taught himself how to manage finance but also how to invest in the right portfolio to grow assets
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