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Best ELSS Mutual Funds

Equity Linked Savings Scheme (ELSS) schemes invest a majority of the fund corpus in equity and equity-related instruments and feature a lock-in period of 3 years. After this period is over, an ELSS scheme converts into an open-ended scheme. 

Under section 80C of the Income Tax Act 1961, investments of up to Rs.1.5 lakh in ELSS funds are eligible for a tax deduction. The primary objective of the best ELSS mutual funds is to maximise portfolio return over a long term while offering tax benefits.

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List of Elss Mutual Funds in India

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Quant Tax Plan FundEquityVery High6.5%5₹2,506
Parag Parikh Tax Saver FundEquityModerately High8.4%5₹942
Canara Robeco Equity Tax Saver FundEquityVery High0.1%5₹4,563
Mirae Asset Tax Saver FundEquityVery High0.5%5₹14,020
IDFC Tax Advantage (ELSS) FundEquityVery High3.9%4₹4,026
Bank of India Tax Advantage FundEquityVery High1.9%4₹693
PGIM India ELSS Tax Saver FundEquityVery High3.8%4₹448
Union Long Term Equity FundEquityVery High3.1%4₹578
DSP Tax Saver FundEquityVery High2.5%4₹10,445
Kotak Tax Saver FundEquityVery High5.6%4₹3,161
ICICI Prudential Long Term Equity FundEquityVery High1.7%4₹10,241
Mahindra Manulife ELSS Kar Bachat Yojana FundEquityVery High3.2%3₹524
Baroda Equity Linked Saving Scheme 96 FundEquityVery High18.5%3₹201
SBI Long Term Equity FundEquityVery High6.6%3₹11,924
Franklin India Taxshield FundEquityVery High2.4%3₹4,908
View All

Features of ELSS Mutual Funds

Here are some features of ELSS mutual funds 2023:

Asset allocation: As per SEBI guidelines, ELSS must allocate at least 80% of their investment corpus to equity shares. 

Risk-reward ratio: Since top ELSS mutual funds primarily invest in stocks, the performance of these schemes is impacted by volatile market conditions. Hence, risk levels associated with these funds are extremely high. At the same time, this exposure to equity enables them to potentially generate higher returns than other investment options, such as fixed deposits or debt funds.

Taxability

Long-term capital gains: Since ELSS schemes involve a lock-in period of 3 years, all gains from it are classified as LTCG. Thus, proceeds from the sale of ELSS units in excess of Rs. 1 lakh attract a 10% tax.

TDS: Dividends realised from ELSS schemes above Rs.5000 are eligible for 10% TDS

Tax exemption: As already mentioned, investments of up to Rs.1.5 lakh in the best ELSS mutual funds are deducted from a person’s total taxable income in any FY.

Who Are These Funds Suited For?

The best ELSS mutual funds 2023 are suited for saving tax while maximising portfolio returns and thus these type of funds are also called best tax saving mutual funds. After all, these fund schemes principally invest in stocks, which allows them to generate substantial yields in comparison to other investment avenues like debt-oriented schemes or FDs. However, it’s riskier than those investment options because of extensive investments in equity shares. That said, investors must consider certain aspects before deciding which is the best ELSS mutual fund for them. 

Financial goal: There are no readymade solutions when it comes to investing. While one scheme might be perfect for an investor, another plan may not be the ideal option for them. Hence, individuals must identify their investment objectives before buying ELSS units. 

Investment time horizon: ELSS funds come with a lock-in period of 3 years, meaning investors cannot redeem their units within that timeframe. Hence, it’s vital for investors to take this factor into account before parting with their savings. 

Risk appetite: Tax saver funds are exposed to volatile market conditions owing to their underlying securities. Hence, these schemes are associated with high risk. Investors must make sure to assess their risk profile before they decide to invest in this type of mutual fund scheme. 

Expense ratio: This refers to the yearly maintenance charge imposed by a fund house on investors to manage a scheme. One should compare the expense ratio of different tax saver funds before investing in one. 

Fund’s past performance: Investors must make sure to check returns generated by a fund over a trailing 3-year and 5-year period and longer if necessary. It helps investors understand how a specific scheme has performed in response to various market conditions. This way, they can know whether a plan is being able to achieve its predetermined objective. Nonetheless, any scheme’s previous performance might not accurately represent how it can deliver in the future. 

Fund manager’s experience: The performance of the best ELSS mutual funds in 2023 is impacted by a fund manager’s decisions. They buy or sell the underlying stocks based on thorough research and analysis. Hence, it’s crucial to check their track record before allocating funds to a tax saver scheme. This assessment is particularly essential because investors cannot withdraw their investments from an ELSS scheme even through poor portfolio management. 

Direct and regular plan: AMCs offer two types of plans – direct and regular. The former doesn’t involve any broker or distributor as they are offered directly. Nevertheless, third parties participate in the latter case. Individuals must weigh in necessary costs before choosing one or the other.

Major Advantages

Here are some of the benefits of investing in the best ELSS mutual fund in 2023:

  • Shortest lock-in period: The 3-year lock-in period of ELSS mutual funds is the shortest among other tax-saving investment options. For example, PPF has a minimum maturity period of 15 years. Hence, tax-saver fund schemes are more liquid.
  • Potential to generate high returns: Contrary to ELSS mutual funds, other tax-saving investment options, like bank fixed deposits and PPF, generate a fixed income. Conversely, ELSS funds invest in stocks of different companies, and their NAV fluctuates accordingly. An uptick in prices of such underlying securities can yield sizeable returns for investors. 
  • Tax benefit: Investments up to Rs.1.5 lakh are eligible for tax deductions as per the provisions of the Income Tax Act

Investment modes: Two routes via which individuals can invest in the best ELSS mutual funds are – Systematic Investment Plan and lump-sum. SIP allows individuals to invest in a scheme by paying fixed instalments at regular intervals (monthly, quarterly, annually, etc.). On the flip side, the lump-sum method allows investors to allocate the available funds to an ELSS mutual fund scheme in one go.

Let's have a closer look

Now let us jump and check about these top 15 mutual fund schemes.

Quant Tax Plan Direct Growth

Fund Performance: The Quant Tax Plan Fund has given 35.73% annualized returns in the past three years and 20.89% in the last 5 years. The Quant Tax Plan Fund belongs to the Equity category of Quant Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Quant Tax Plan Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹2,506Cr
1Y Returns6.5%

Parag Parikh Tax Saver Fund Direct Growth

Fund Performance: The Parag Parikh Tax Saver Fund belongs to the Equity category of PPFAS Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Parag Parikh Tax Saver Fund via lump sum is ₹500 and via SIP is ₹1,000.

Min Investment Amt₹500
AUM₹942Cr
1Y Returns8.4%

Canara Robeco Equity Tax Saver Direct Growth

Fund Performance: The Canara Robeco Equity Tax Saver Fund has given 19.11% annualized returns in the past three years and 14.33% in the last 5 years. The Canara Robeco Equity Tax Saver Fund belongs to the Equity category of Canara Robeco Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Canara Robeco Equity Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹4,563Cr
1Y Returns0.1%

Mirae Asset Tax Saver Fund Direct Growth

Fund Performance: The Mirae Asset Tax Saver Fund has given 17.85% annualized returns in the past three years and 13.2% in the last 5 years. The Mirae Asset Tax Saver Fund belongs to the Equity category of Mirae Asset Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹14,020Cr
1Y Returns0.5%

IDFC Tax Advantage (ELSS) Direct Plan Growth

Fund Performance: The IDFC Tax Advantage (ELSS) Fund has given 21.47% annualized returns in the past three years and 11.32% in the last 5 years. The IDFC Tax Advantage (ELSS) Fund belongs to the Equity category of IDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in IDFC Tax Advantage (ELSS) Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹4,026Cr
1Y Returns3.9%

Bank of India Tax Advantage Direct Growth

Fund Performance: The Bank of India Tax Advantage Fund has given 20.63% annualized returns in the past three years and 11.83% in the last 5 years. The Bank of India Tax Advantage Fund belongs to the Equity category of BOI AXA Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Bank of India Tax Advantage Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹693Cr
1Y Returns1.9%

PGIM India ELSS Tax Saver Fund Direct Growth

Fund Performance: The PGIM India ELSS Tax Saver Fund has given 19.18% annualized returns in the past three years and 12.32% in the last 5 years. The PGIM India ELSS Tax Saver Fund belongs to the Equity category of PGIM India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in PGIM India ELSS Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹448Cr
1Y Returns3.8%

Union Long Term Equity Fund Direct Growth

Fund Performance: The Union Long Term Equity Fund has given 17.38% annualized returns in the past three years and 11.24% in the last 5 years. The Union Long Term Equity Fund belongs to the Equity category of Union Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Union Long Term Equity Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹578Cr
1Y Returns3.1%

DSP Tax Saver Direct Plan Growth

Fund Performance: The DSP Tax Saver Fund has given 16.76% annualized returns in the past three years and 11.63% in the last 5 years. The DSP Tax Saver Fund belongs to the Equity category of DSP Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in DSP Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹10,445Cr
1Y Returns2.5%

Kotak Tax Saver Fund Direct Growth

Fund Performance: The Kotak Tax Saver Fund has given 16.07% annualized returns in the past three years and 12.45% in the last 5 years. The Kotak Tax Saver Fund belongs to the Equity category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Tax Saver Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹3,161Cr
1Y Returns5.6%

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

Fund Performance: The ICICI Prudential Long Term Equity Fund has given 14.94% annualized returns in the past three years and 10.88% in the last 5 years. The ICICI Prudential Long Term Equity Fund belongs to the Equity category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Long Term Equity Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹10,241Cr
1Y Returns1.7%

Mahindra Manulife ELSS Kar Bachat Yojana Direct Growth

Fund Performance: The Mahindra Manulife ELSS Kar Bachat Yojana Fund has given 18.01% annualized returns in the past three years and 10.22% in the last 5 years. The Mahindra Manulife ELSS Kar Bachat Yojana Fund belongs to the Equity category of Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Mahindra Manulife ELSS Kar Bachat Yojana Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹524Cr
1Y Returns3.2%

Baroda Equity Linked Saving Scheme 96 Direct Growth

Fund Performance: The Baroda Equity Linked Saving Scheme 96 Fund has given 17.55% annualized returns in the past three years and 12.53% in the last 5 years. The Baroda Equity Linked Saving Scheme 96 Fund belongs to the Equity category of Baroda Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Baroda Equity Linked Saving Scheme 96 Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹201Cr
1Y Returns18.5%

SBI Long Term Equity Fund Direct Plan Growth

Fund Performance: The SBI Long Term Equity Fund has given 16.67% annualized returns in the past three years and 9.4% in the last 5 years. The SBI Long Term Equity Fund belongs to the Equity category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Long Term Equity Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹11,924Cr
1Y Returns6.6%

Franklin India Taxshield Direct Growth

Fund Performance: The Franklin India Taxshield Fund has given 15.47% annualized returns in the past three years and 9.88% in the last 5 years. The Franklin India Taxshield Fund belongs to the Equity category of Franklin Templeton Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Franklin India Taxshield Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹4,908Cr
1Y Returns2.4%

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