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What are the best tax saving mutual funds for 2017?

I am looking to invest in elss funds - SIP of Rs 10K per month. Please suggest.

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Pijush Kanti Biswas

Mutual funds can be tax-efficient investment avenues that can help reduce your tax burden and at the same time increase your wealth. But not all investments into mutual funds are tax-free under Indian Income Tax Act.

Only ELSS Mutual Funds offer tax benefits under section 80C of the Income Tax Act. As per this section, one can avail tax exemptions up to INR 1,50,000 by investing in ELSS funds.

Equity Linked Savings Scheme (ELSS):

  • ELSS, also known as tax saving mutual funds, is a dedicated mutual fund scheme that allows investors to save tax. It also provides an opportunity for long term capital appreciation.
  • An ELSS fund manager invests in a diversified portfolio, predominantly consisting of equity and equity related instruments that carry high-risk and have the potential to deliver high-returns.
  • Features of ELSS Funds:
  1. Tax-saving
  2. Three-year lock-in period
  3. Can be held even after the completion of three years
  4. Offers dividend as well as growth options
  5. Tax Saving instrument

Some examples of popular ELSS for 2017:

  1. Reliance Tax Saver (ELSS) Fund 
  2. IDFC Tax Advantage (ELSS) Fund 
  3. Aditya Birla Sun Life Tax Relief 96
  4. DSP BlackRock Tax Saver Fund
  5. Kotak Taxsaver – Regular
  6. L&T Tax Advantage Fund – Regular
  7. Principal Tax Savings Fund

These ELSS has been rated 5 and 4 star by Groww.

Happy Investing!


Harsh

Tax saving mutual funds or ELSS are funds where the investments made are exempted from tax under section 80C (upto 1.5 lac). These funds have a lock-in of 3 years. The best way to invest in them is through SIP (monthly investments). 


Here are the best performing tax saving mutual funds for 2017 - 

1. Reliance Tax saver

2. DSP Tax saver

3. Birla Tax relief 96

4. Kotak Tax saver


Check the attached portfolio of these funds. You can easily diversify your investment by investing in the portfolio. 


The portfolio has give ~21% year-on-year returns in last 5 years. 


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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