ELSS Mutual Funds Investment – The Best Tool For Tax Savings

The ELSS Mutual fund is the last of the 10 types of equity funds identified under SEBI’s new classification of mutual funds. According to SEBI rules, at least 18% of these investments should be in equities and investments in these funds should have a lock-in period of at least 3 years.

As February dawns, taxpayers or those who file income tax returns start rushing for the same thing and that is to invest to avail the tax relief available under Section 80C. Then tax advisors, chartered accounts, investment advisors, relatives, co-workers are consulted. Various options are explored on the internet and finally a one-time investment is made in haste and its proof is presented. If you look at the fruits of such hands-on investments after 3 years or 5 years, they are probably bitter instead of sweet. Investment is a science; Not a gambling, people know it but don’t turn around.

ELSS Mutual Funds

Equity Linked Savings Scheme funds also know as a ELSS funds. A diversified mutual fund with the benefits of lowest tax-saving lock-in of just 3 years. Exempt up to ₹ 1,50,000 from taxable income.

Benefits of ELSS Mutual Funds

  • Lowest lock-In Period
  • Tax Efficient
  • Long-term wealth creators
  • Efficient fund managements
  • Option of monthly SIP
  • Low cost entry points.
  • High liquidity
  • ELSS funds are Diversified Equity Funds.

Currently, there are 10 popular tax saving investment tools in India. When studying all of them, one has to consider the returns, security, flexibility, liquidity, transparency, ease and adequacy of maturity. ELSS funds are by far the most useful tool in all respects. This has to be accepted. If you look at the table below, you will notice it.

Saving SchemesReturnsLock-In
ELSS mutual funds13.18%3 Years
National Pension Scheme9.33%Until Retirement
Unit Linked Insurance Plans8.09%5 Years
Public Provident Fund7.9%15 Years
Senior Citizen Saving Scheme8.6%5 Years
National Saving Certificates7.9%5 Years
Sukanya Samriddhi Yojana8.4%Until the girls turns 18
Tax Saving FDS6.4-7.6%5 Years
Pension Plans7.5-9%Until Retirement
Life Insurance6.5-5%5 Years

ELSS or Tax Saving Funds.

Mutual Funds The most popular type of ELSS Mutual funds in the world are the most popular because of their ability to offer the highest returns and the lowest Lock-in Period among tax saving tools! Even if this is true, how to utilize the ELSS Fund’s highest return capability? I mean, people don’t think about how to invest in this fund in a planned way.

ELSS Funds Income Tax Benefits

Let us now talk about Section 80C of the Income-tax Act, which sets out some of the means of investing under this section. If you invest in it, you will get up to ₹ 1.5 lakh is exempt from income tax. By investing up to ₹ 1,50,000, you can deduct that amount from your taxable income.

E.g. An individual’s annual taxable income is ₹ 10 lakhs (assuming all other deductions) and invest ₹ 1,50,000 in ELSS Funds than ₹ 1,50,000 will be deducted from his ₹ 10 lakh and will have to pay tax on ₹ 8.5 lakh.

Things to Consider Before Buying ELSS Mutual Funds

We have already mentioned them in the article on multi Cop fund. But there are some things to keep in mind when investing in an ELSS fund. They are as follows:

  • Most people invest in this fund at the end of the year. Instead, invest at the beginning of the financial year.
  • The best way to invest in this fund is SIP. Both tax savings and wealth creation can be achieved by investing in a regular ELSS fund through SIP.
  • Lock-in Period of this fund is at least 3 years, but do not rush to withdraw investment after 3 years.
  • When choosing a fund, you should study the things that you study at other times.

India currently has the following leading ELSS funds. This table lists the ELSS funds that have given the best returns in the last 10 years. The reason behind giving it is that if you think of ELSS fund for your long term planning without thinking of just 3 years, you should get an idea of ​​the benefits.

Scheme NameCrisil Rank3Y5Y
BOI AXA Tax Advantage Fund513%20%
Canara Robeco Equity Tax Saver517%18%
Quant Tax Plan – Direct Plan524%24%
Mirae Asset Tax Saver Fund518%23%
Union Long Term Equity Fund412%13%
IDFC Tax Advantage (ELSS) Fund410%17%
UTI Long Term Equity Fund (Tax Saving)412%15%
JM Tax Gain Fund – (Direct)413%18%
Returns data as on: 28-Apr-21


For those who have a high income, this plan has a lock-in period of three years. If an investor sells his units early for some reason, he does not get the benefit of income tax. If you want to keep the investment for a term, you can keep it. Basically ELSS is a High risk high return product. The estimated benefit is 22 to 28%.

Take a Look

Mid-Cap Mutual Funds Investment
Small Cap Funds Investment
Corporate Bond Funds
Are Index Funds Investment is Good Option?
All About Mutual Funds
Gold Funds Investments
11 Easy TDS Saving Ways

ELSS Mutual Funds Tax Saving Benefits Information

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