Best ELSS Mutual Funds

Tax saving mutual funds are ELSS funds ELSS stands for Equity Linked Savings Scheme. The government makes policies to achieve goals they think are necessary for the country’s good as a whole.

ELSS mutual funds come with a 3 year lock-in period. This lock-in period is also a part of the government’s plan to help investors gain in the long term. Most investors often panic when the markets fall. At such times, they end up selling their investments at alower price than at which they had originally bought.

Equity Linked Savings Scheme funds are also known as tax savings mutual funds. They are the most popular in the equity funds category due to the tax benefits provided by them under section 80C of the Income Tax Act. Investor can save up to a amount of 1.5 lakhs by investing in these funds. But these funds have a lock-in period of 3 years. Investors cannot redeem their money before the maturity date. Most of the mutual funds in India generally don’t have a lock-in period but ELSS funds are exception in this aspect.

No other equity mutual funds qualify for the tax exemption under section 80C of the act. However, equity can offer other tax benefits to the investor. For example, investors can get tax free dividends from the equity funds. If you hold your equity mutual funds for more than a year, the returns will qualify for long term capital gains tax. If you sell your equity funds before a year, 15 % tax is levied on the short term capital gains.

Investors can also invest in these funds through Systematic Investment Plan (SIP) to minimize the market risk. These funds are great way to save tax on your hard earned money.

However, over a longer period of time, investments usually perform well. Thus, to protect investors from their own panic moves, the government has mandated a lock-in period of 3 years. Interestingly, this lock-in period of 3 years is the lowest lock-in period among all other tax saving schemes.

Under Sec 80C of the Income Tax Act of India, you can claim deductions from your taxable income by investing in equity oriented funds.

Among these most popular are the ELSS or commonly known as Equity Linked Savings Scheme, where you can save up to 1.5 lakhs in taxes. However, all the investment have minimum three years lock-in period. A 10% tax is applicable on the gains.

Purpose: As explained above, investing in this category can help you with your tax savings and long term capital growth.

Top 10 Elss Mutual Funds

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Aditya Birla Sun Life Tax Relief 96EquityModerately High-0.8%5star6,628
Invesco India Tax PlanEquityModerately High2.6%5star609
Motilal Oswal Long Term Equity FundEquityModerately High-2.7%4star1,066
IDFC Tax Advantage (ELSS) FundEquityModerately High-2.8%4star897
Aditya Birla Sun Life Tax PlanEquityModerately High-1.5%4star677
BOI AXA Tax Advantage FundEquityModerately High-9.6%4star184
DSP BlackRock Tax Saver FundEquityModerately High-4.6%4star3,834
Axis Long Term Equity FundEquityModerately High4.6%4star16,999
ICICI Prudential Long Term Equity Fund (Tax Saving)EquityModerately High3.7%4star5,386
L&T Tax Advantage FundEquityModerately High-1.8%4star3,176
Principal Tax Savings FundEquityModerately High-6.3%4star374
Mirae Asset Tax Saver FundEquityModerately High1.7%3star1,121
IDBI Equity Advantage FundEquityModerately High0.6%3star616
Tata India Tax Savings FundEquityModerately High-3.7%3star1,425
UTI Long Term Equity Fund (Tax Saving)EquityModerately High-4.1%3star964
View All Top 10 Elss Mutual Funds

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Aditya Birla Sun Life Tax Relief 96 - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 13.77% annualized returns in the last 3 years. In the last 1 year, it gave -0.82% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -0.82% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Ajay Garg

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating5star
AUM6,628Cr
1Y Returns-0.8%

Invesco India Tax Plan - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 13.32% annualized returns in the last 3 years. In the last 1 year, it gave 2.61% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 2.61% returns in the last 1 year. Groww rated this fund as 5 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Amit Ganatra, Dhimant Kothari

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating5star
AUM609Cr
1Y Returns2.6%

Motilal Oswal Long Term Equity Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 15.6% annualized returns in the last 3 years. In the last 1 year, it gave -2.74% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -2.74% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Abhiroop Mukherjee, Gautam Sinha Roy, Siddharth Bothra

Launch Date20 Jan 2015
Min Investment Amt500
Groww Rating4star
AUM1,066Cr
1Y Returns-2.7%

IDFC Tax Advantage (ELSS) Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 14.12% annualized returns in the last 3 years. In the last 1 year, it gave -2.79% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -2.79% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Daylynn Pinto

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM897Cr
1Y Returns-2.8%

Aditya Birla Sun Life Tax Plan - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 13.34% annualized returns in the last 3 years. In the last 1 year, it gave -1.46% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -1.46% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Ajay Garg

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM677Cr
1Y Returns-1.5%

BOI AXA Tax Advantage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 10.38% annualized returns in the last 3 years. In the last 1 year, it gave -9.61% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -9.61% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Saurabh Kataria

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM184Cr
1Y Returns-9.6%

DSP BlackRock Tax Saver Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 12.65% annualized returns in the last 3 years. In the last 1 year, it gave -4.58% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -4.58% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Rohit Singhania

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM3,834Cr
1Y Returns-4.6%

Axis Long Term Equity Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 12.75% annualized returns in the last 3 years. In the last 1 year, it gave 4.61% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 4.61% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Jinesh Gopani

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM16,999Cr
1Y Returns4.6%

ICICI Prudential Long Term Equity Fund (Tax Saving) - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 11.12% annualized returns in the last 3 years. In the last 1 year, it gave 3.69% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 3.69% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: George Heber Joseph

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM5,386Cr
1Y Returns3.7%

L&T Tax Advantage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 14.3% annualized returns in the last 3 years. In the last 1 year, it gave -1.8% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -1.8% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Soumendra Nath Lahiri

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM3,176Cr
1Y Returns-1.8%

Principal Tax Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 14.03% annualized returns in the last 3 years. In the last 1 year, it gave -6.31% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -6.31% returns in the last 1 year. Groww rated this fund as 4 Star. This is one of the best Equity mutual fund in India.

Fund Manager: P V K Mohan

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating4star
AUM374Cr
1Y Returns-6.3%

Mirae Asset Tax Saver Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided -100% annualized returns in the last 3 years. In the last 1 year, it gave 1.66% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 1.66% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Neelesh Surana

Launch Date27 Dec 2015
Min Investment Amt500
Groww Rating3star
AUM1,121Cr
1Y Returns1.7%

IDBI Equity Advantage Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 10.85% annualized returns in the last 3 years. In the last 1 year, it gave 0.59% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided 0.59% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Equity mutual fund in India.

Fund Manager: V Balasubramanian

Launch Date9 Sep 2013
Min Investment Amt500
Groww Rating3star
AUM616Cr
1Y Returns0.6%

Tata India Tax Savings Fund - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 12.77% annualized returns in the last 3 years. In the last 1 year, it gave -3.73% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -3.73% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Rupesh Patel

Launch Date13 Oct 2014
Min Investment Amt500
Groww Rating3star
AUM1,425Cr
1Y Returns-3.7%

UTI Long Term Equity Fund (Tax Saving) - Direct - Growth

Fund Performance: This fund has consistently beaten its benchmark in ELSS segment and provided 9.77% annualized returns in the last 3 years. In the last 1 year, it gave -4.09% returns.

Why to invest: The fund has consistently beaten other funds in same category along with its benchmark and provided -4.09% returns in the last 1 year. Groww rated this fund as 3 Star. This is one of the best Equity mutual fund in India.

Fund Manager: Vetri Subramaniam, Lalit Nambiar

Launch Date31 Dec 2012
Min Investment Amt500
Groww Rating3star
AUM964Cr
1Y Returns-4.1%

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How to Invest in Tax saving Mutual Funds?

In order to apply for Tax saving Mutual Funds, an investor will need to provide his personal details including PAN and Aadhaar number. This is mandatory as per KYC regulations so as to avoid fraud. KYC verification can be done online also. We at Groww can help you become KYC compliant. Once you are KYC complaint, you can use our website, groww.in to invest in any mutual funds – ELSS mutual funds or otherwise. One of the most recommended methods of investments in ELSS is SIP. It allows the investors to average their investments. Moreover, there is no additional taxation on SIP. SIP does not burden the wallet also as it gives the option of investing small amounts rather than investing a lump sum amount.

Why Invest in Tax saving Mutual Funds?

Tax saving Mutual Fund investment is best recommended for those who are in the initial phase of their career. When the earnings are humble, no one likes to take high risks and hence, it is best for beginners. But in much the same way, for people who are earning good but don’t like putting all eggs in one basket, ELSS is good too. This is because ELSS helps them to mitigate their tax by saving money without risk. Thus, there is no specific age where the Tax saving Mutual Fund investment is best. It suits everyone who wants to earn good returns by saving taxes simultaneously.

Who issues Tax saving mutual funds?

Asset management companies (or AMCs or fund houses) create mutual funds. All AMCs will have to be approved by the government body, Securities and Exchange Board of India (SEBI). All mutual funds have to be whetted by SEBI before it is open for the public to invest.

What does investing in Tax saving mutual funds actually mean?

Suppose a mutual fund invests in ten stocks and total current market value of these stocks is 1.1 Crore. Out of this, the AMC deducts say, 0.1 Crore for operating the fund (this is known as the expense ratio). So the net value is 1 crore. Now the AMC will divide this 1 Crore into say, 10,000 parts. These parts are known as units. The cost of one unit is 1Cr/10,000 = Rs. 1000. This is known as the Net Asset Value (NAV) of the mutual fund. Suppose the AMC has set a minimum investment requirement of Rs. 500. Then if you pay Rs. 500, you will get 0.5 units of the fund. Remember that the cost of one unit is the cost when you made the purchase. Suppose after one year, the NAV has fallen to Rs. 700 per unit and you wish to exit the fund (also known as redemption), then you sell your 0.5 units back to the AMC and get 0.5 x Rs. 700 = Rs. 350 back. Yes, you invested Rs. 500 and got back Rs. 350 – a loss of 150 over a year. The point is, that you buy units at current NAV and sell units (fully or partially) at current NAV. This is what investing in mutual fund actually means.

Do Tax saving mutual fund guarantee returns?

Well, sales guys would love to tell you that “over the long term” you will get good returns from mutual funds, but the truth is, there is no guarantee. As the above example shows, you buy at current market value and sell at the current market value. Anything, literally anything can happen in between spectacular returns or spectacular losses. Unless you are mentally ready to accept this and learn how to minimise this risk, do not invest in mutual funds.

How to invest in Tax saving mutual funds on Groww?

One of the best ways to hedge against the small-cap volatility is to adopt a phased approach, also known as Systematic Investment Plan (SIP) approach. We are sure that you must be aware of SIP and its benefits. Buying in small quantity but buying regularly provides you with faster growth. On Groww.in, all transactions to and from AMC is done via BSE. When you decide to invest in a large cap mutual fund of your choice, you choose that mutual fund on the website and click ‘invest’. Following that, you are redirected to the BSE page where you make the payment. BSE then directs your money to the AMC managing your mutual fund. To be assured at your end, you can visit the individual AMC website after the payment. You would be able to see all your purchased units against your folio number.

How long does it take to start investing in Tax saving mutual funds if I do not have a KYC?

It is not possible for any investor to start investing in mutual funds without having completed the KYC process. Under the Prevention of Money Laundering Act (PMLA), Know Your Customer (KYC) norms have been mandated to track the legality of funds used in an investment. KYC is a one-time process which every first-time mutual fund investor needs to follow, to be able to invest in a mutual fund. KYC process on Groww can be completed in 2-3 days. KYC can be completed online with the help of E-KYC or electronic KYC. E-KYC Aadhar (based on OTP) : Investor can use online KYC facility using just the aadhar card number and PAN number, by visiting the website and following the easy process. After entering relevant details like aadhar and PAN number, investor will receive an OTP and KYC will be completed instantly. However, one can invest only up to ₹50,000 per fund house per year under this method.

When is the right time to start investing in Tax saving Mutual Funds?

The answer to this question depends on the following criteria: 1) the rating and performance of mutual fund you are investing into 2) the amount of risk you are willing to take Depending on the above factors let's go ahead: 1) the performance of mutual fund you are investing into makes a lot of difference since a lot of research needs to be done before investing. i) how that particular fund is diversifying its assets since many of funds are sector funds and some others put a lot of money into one sector like banking/finance. ii) But if that particular sector doesn't perform well in the long term you would end up losing your money iii) Some sectors like FMCG (HUL, Dabur) or automobile like Maruti Suzuki(because of innovations it brings in) almost make profits throughout the year and hence it's very advantageous to invest in them for long-term in these sectors. Investment time: more than 3 years. 2) The amount of risk you are willing to take i) It is important since if you want to invest in low-risk funds, debt funds will be the best option(moderate returns, low risk) investment time period: less than 1 or 1.5 years ii) But if you want high returns, more diversification equity mutual funds will be the best since higher the risk, more will be the returns.Investment time: depending on the performance of fund (on an average 4 or greater than 4 years) iii) For a balanced portfolio, you may invest into balanced mutual funds where there is a combination of both equity and debt mutual funds which will again help you to invest for a good duration like less than 2-3 years.

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Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, investment goal, time frame, risk and reward balance and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs.
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