ELSS Tax saving mutual funds are just like other mutual funds.
ELSS tax saving mutual funds are special because they provide tax benefits under section 80C of the Indian Income Tax Act. Most ELSS tax saving mutual funds invest in growth stocks.
Mutual funds are prevalent now. These investment solutions provide investors access to a range of financial instruments via competent investment managers.
These investments provide better returns than fixed deposits. To achieve this aim, mutual funds combine money from several members and invest it in a balanced debt and equity portfolio.
The funds provide open- or closed-ended plans, specialized funds, or combinations of these. Investors may pick any fund based on their objectives and risk tolerance.
High-risk investments give high returns, medium-risk ones medium, and low-risk ones little. Investors must pick the fund they think would assist them reach their objectives.
Is investing in mutual funds a good idea? Yes, mutual funds provide a lot of benefits and almost provide guaranteed returns. In this article, you will find the best ELSS tax saving mutual funds that you can choose from.
If you have any questions or want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or use these contact options.
This article isn’t formal tax or legal advice, and the facts might have changed since we wrote this article.
Table of Contents
What is an ELSS Tax Saving Mutual Fund?
The equity-linked savings scheme (ELSS) is a mutual fund scheme that mostly allocates its investments to the stock market or equities, as indicated by its name.
Investments made in ELSS plans up to a maximum amount of 1.5 lakhs are eligible for a tax deduction as per the provisions of Section 80C of the Income Tax Act.
One notable benefit of the Equity Linked Savings Scheme (ELSS) in comparison to other tax-saving tools is its comparatively short lock-in period of three years.
According to the stipulations, the sale of the investment is permissible only subsequent to a three-year period commencing from the date of acquisition.
In order to optimize profits from ELSS tax saving mutual funds, it is advisable to maintain one’s investments for the longest feasible length. In the context of an ELSS SIP (systematic investment plan), it is important to note that each individual installment is subject to a lock-in period of three years. Consequently, it follows that the maturity date of each installment will change accordingly.
11 Best ELSS Tax Saving Mutual Funds
Quant Tax Plan Direct-Growth
Quant Mutual Fund provides investors with access to an Equity Linked Savings Scheme (ELSS) in the form of the Quant Tax Plan Direct-Growth. The aforementioned fund has a maturity date of January 1, 2013, marking the beginning of its length of ten years and six months.
As of the 30th of June in 2023, the Quant Tax Plan Direct-Growth fund had assets under management (AUM) totaling 4,049 Crores, which placed it in the position of being a medium-sized fund within the category to which it belonged.
Cost and Returns
Compared to other ELSS tax saving mutual funds, the fund’s expense ratio is 0.57%. Actively managed funds do this.
Over the last year, the Quant Tax Plan Direct-Growth has returned 21.31%.
Since its inception, the investment has averaged 20.93% annualized returns. Every three years, the fund’s investments double.
Like other funds in its category, the Quant Tax Plan Direct-Growth plan consistently delivers returns. In a falling market, losses can only be handled to a certain extent.
Portfolio Composition and Top Holdings
The majority of the fund’s cash is put into investments in industries including the financial sector, the construction industry, the energy industry, the consumer staples industry, and healthcare.
When compared to other products in its category, the fund in issue has shown slightly lower levels of exposure in the Financial and Construction sectors.
The fund’s portfolio includes the following five significant holdings: State Bank of India Limited, National Thermal Power Corporation Limited, ITC Limited, Reliance Industries Limited, and Larsen & Toubro Limited.
Investment Goals
The major goal of the program is to generate capital appreciation by primarily investing in equity shares that have the potential for growth.
This will be accomplished via the use of various investment strategies. The provision of dividends and several other kinds of cash is the secondary objective.
Bandhan Tax Advantage (ELSS) Direct Plan-Growth
Bandhan Mutual Fund is the company that provides the equity-linked savings scheme (ELSS) known as the Bandhan Tax Advantage (ELSS) Direct Plan-Growth.
The fund will run for a total of 10 years and six months, starting from the day it was established, which was January 1, 2013.
The Bandhan Tax Advantage (ELSS) Direct Plan-Growth is a fund that is considered to be of a medium size within its category. As of the 30th of June, 2023, the fund’s assets under management (AUM) was 4,776 Crores.
Cost and Returns
The fund’s cost ratio is 0.73%, substantially lower than ELSS’s comparable products.
Bandhan Tax Advantage (ELSS) Direct Plan-Growth returned 24.86 percent last year.
Since its launch, the investment has returned 18.19% annually. Fund investments have doubled every three years.
Bandhan Tax Advantage (ELSS) Direct Plan-Growth has a return consistency comparable to other funds in its category. If the market keeps falling, losses are limited.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the automobile industry, technological advancements, service industries, and the healthcare industry.
When compared to other products that fall into the same category, the fund in issue has shown much lower levels of exposure in the automotive and financial industries.
The fund’s portfolio is comprised of the top five holdings, which are as follows: HDFC Bank Ltd., ICICI Bank Ltd., Reliance Industries Ltd., and Axis Bank Ltd.
Investment Goals
The plan’s purpose is to assemble a diversified portfolio that is made up of stocks issued by companies that have sound fundamentals and are sold at reasonable prices.
The investment strategy permits an allocation of up to 20% of total assets to debt and money market instruments, with the remainder of the investment capital being allocated entirely to equities and equity-related securities.
Bank of India Tax Advantage Direct-Growth
An equity-linked savings strategy (ELSS) called the Bank of India Tax Advantage Direct-Growth is one of the investment options provided by the Bank of India Mutual Fund.
The aforementioned fund has a maturity date of January 1, 2013, marking the beginning of its length of ten years and six months.
As of the 30th of June in the year 2023, the Bank of India Tax Advantage Direct-Growth fund has assets under management (AUM) of 792 Crores, which places it in the position of being a fairly tiny fund within the category to which it belongs.
Cost and Returns
The fund’s cost ratio is 1.26%, which is higher than the average expense ratio of comparable ELSS products.
During the previous year, the Bank of India Tax Advantage Direct-Growth earned a return of 23.51%. Since its inception, the investment has produced an annual return of 17.50% on average.
Every three years, the amount of money invested in the fund grows by a factor of two.
The level of return consistency provided by the Bank of India Tax Advantage Direct-Growth program is comparable to that provided by the great majority of funds in its category. In a sinking market, the capacity to limit financial losses is below average.
Portfolio Composition and Top Holdings
The fund’s primary focus is on making investments in the financial, consumer staples, energy, healthcare, and capital goods markets, each of which receives a significant amount of its available resources.
When compared to the exposure levels held by other products in the same category, this product’s exposure to the Financial and Consumer Staples sectors has historically been on the lower end of the spectrum.
The following companies make up the top five holdings in the fund’s portfolio: HDFC Bank Ltd., State Bank of India, ICICI Bank Ltd., Canara Bank, and National Thermal Power Corp. Ltd.
Investment Goals
The plan’s purpose is to build a diversified investment portfolio made up of stocks issued by companies that implement environmentally responsible business practices.
There will be no priority given to market size or sector when selecting the stocks to include in the portfolio. For the purpose of selecting equity, the plan that is being offered will conform to a top-down method.
ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan-Growth
ICICI Prudential is a financial services provider that offers a mutual fund plan known as the ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan-Growth.
It is one of the best ELSS tax saving mutual funds, and its primary purpose is to provide investors with favorable tax treatment.
The aforementioned fund has a maturity date of January 1, 2013, marking the beginning of its term that lasts for ten years and six months.
The ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan-Growth is classified as a medium-sized fund within its relevant category due to the fact that its assets under management (AUM) are equal to 10,963 Crores as of 30/06/2023.
Cost and Returns
The fund’s cost ratio is 1.16%, which is much higher than the average expense ratio of ELSS’s comparable products.
Investors who picked the Growth option with the ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan saw their returns improve by 17.47% over the previous year. Since its inception, the investment has delivered an annualized return of 15.52 percent on average.
Every three years, the fund has consistently grown by doubling the amount of money invested.
The level of return consistency provided by the ICICI Prudential Long Term Equity Fund (Tax Saving) Direct Plan-Growth plan is comparable to that provided by the great majority of funds in the same category. In a declining market, there is only a limited capacity to avert more losses.
Portfolio Composition and Top Holdings
The fund commits the majority of its resources, including a significant percentage of its money, to investments in industries such as finance, services, healthcare, automobile manufacturing, and technology.
When compared to other products that fall into the same category as this one, the amount of exposure that this particular product has had to the Financial and Services sectors has been slightly smaller.
The top five holdings in the fund’s portfolio are as follows: ICICI Bank Limited, Axis Bank Limited, Avenue Supermarts Limited, Bharti Airtel Limited, and Maruti Suzuki India Limited.
Investment Goals
In order to accomplish the program’s goal of long-term growth in capital, about 90% of the investments will be placed in equity-related instruments.
The remaining 10% of the investments will be distributed among debt and money market products, along with cash (including money that is available on call).
SBI Long Term Equity Fund Direct Plan-Growth
SBI Mutual Fund is now accepting applications for an Equity Linked Savings Scheme (ELSS) called the SBI Long Term Equity Fund Direct Plan-Growth.
The aforementioned fund has a term that lasts for ten years and six months, starting from the day it was established, which was January 1, 2013.
The SBI Long Term Equity Fund Direct Plan-Growth has assets under management (AUM) with a total value of 14,430 Crores as of the 30th day of June in 2023. Within the context of its appropriate category, this fund is able to be categorized as a vehicle of medium size.
Cost and Returns
The fund’s expense ratio is roughly 1%, which is commensurate with the typical costs experienced by comparable ELSS tax saving mutual funds.
During the previous year, the SBI Long Term Equity Fund Direct Plan-Growth had a return of 29.76%. Since it was originally made accessible, the investment has produced an annual return of 15.12% on average. Every three years, the amount of money invested in the fund grows by a factor of two.
The degree of return consistency provided by the SBI Long Term Equity Fund Direct Plan-Growth plan is comparable to that provided by other funds in the same category. There is only a limited amount of capacity to manage losses if the market continues to collapse.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the energy industry, the healthcare industry, the automobile industry, and the capital goods industry.
When compared to other products that fall into the same category as this one, the degree of exposure that this particular product has had in the Financial and Energy sectors has been slightly lower.
The top five holdings in the fund’s portfolio are as follows: ICICI Bank Limited, Larsen & Toubro Limited, Cummins India Limited, Mahindra & Mahindra Limited, and Reliance Industries Limited.
Investment Goals
Through the purchase of stocks, cumulative convertible preference shares, completely convertible debentures, and fully convertible bonds, the program intends to generate capital appreciation as its ultimate goal.
The idea went through some kind of transition in November of 1999, and as a result, it was reworked into an open-ended plan later on.
PGIM India ELSS Tax Saver Fund Direct-Growth
PGIM India Mutual Fund is the organization that provides investors with access to an equity-linked savings plan (ELSS) known as the PGIM India ELSS Tax Saver Fund Direct-Growth.
The aforementioned fund has a maturity date of October 19, 2015, and a term that lasts for seven years and nine months.
As of the 30th of June in 2023, the assets under management (AUM) value of the PGIM India ELSS Tax Saver Fund Direct-Growth was valued at 540 Crores, which places it in the position of a medium-sized fund within the category to which it belongs.
Cost and Returns
The fund has a cost ratio of 0.89%, which is relatively close to the typical charges imposed by comparable products supplied by ELSS.
The PGIM India ELSS Tax Saver Fund Direct-Growth produced a 20.07 percent return over the previous year. Since its inception, the investment has achieved an average annual return rate of 15.62 percent. Every three years, the amount of money invested in the fund grows by a factor of two.
The PGIM India ELSS Tax Saver Fund Direct-Growth program has the consistent ability to deliver returns comparable to those achieved by other funds in the same category. There is just a bare minimum of capacity to manage losses if the market continues to decline.
Portfolio Composition and Top Holdings
The majority of the fund’s assets are invested in businesses that are involved in the financial industry, the energy industry, the consumer staples industry, the technology industry, and the automobile industry.
When compared to other products that fall into the same category as this one, the degree of exposure that this particular product has had in the Financial and Energy sectors has been slightly lower.
The fund’s portfolio is comprised of the top five holdings, which are as follows: Reliance Industries Ltd., ICICI Bank Ltd., HDFC Bank Ltd., Larsen & Toubro Ltd., and Infosys Ltd.
Investment Goals
Obtaining long-term capital appreciation is the primary goal of the program, and this will mostly be accomplished via investments in stocks and equity-related derivatives.
In addition to this, the program intends to provide investors who meet certain criteria the option to reduce their taxable income by claiming deductions, in line with the rules of the Income Tax Act of 1961, which are updated on a regular basis.
Kotak Tax Saver Fund Direct-Growth
Kotak Mahindra Mutual Fund is the organization that provides the Equity Linked Savings Scheme (ELSS) known as the Kotak Tax Saver Fund Direct-Growth.
The fund’s duration is ten years and six months, counting backward from its launch date of January 1, 2013, when it was first established.
As of the 30th of June in 2023, the assets under management (AUM) for the Kotak Tax Saver Fund Direct-Growth are valued at a total of 3,855 Crores. Within the context of its appropriate category, it is possible to describe it as a medium-sized fund.
Cost and Returns
The fund has an expense ratio of 0.59%, which is much lower than the average cost ratio of other ELSS tax saving mutual funds.
Over the preceding calendar year, the Kotak Tax Saver Fund Direct-Growth earned a return of 22.16%. Since it was originally made accessible, the investment has produced an annual return of 15.92% on average. Every three years, the amount of money invested in the fund grows by a factor of two.
The ability of the Kotak Tax Saver Fund Direct-Growth plan to provide regular returns is comparable to that of other funds in the same category. There is just a bare minimum of capacity to manage losses if the market continues to decline.
Portfolio Composition and Top Holdings
The majority of the fund’s resources are invested in businesses that are involved in the financial industry, the automobile industry, the consumer staples industry, the capital goods industry, and the energy industry.
When compared to other products in the same category, the fund has shown slightly lower levels of exposure in the financial and automobile industries.
The fund’s portfolio is comprised of the top five holdings, which are as follows: ICICI Bank Ltd., Axis Bank Ltd., Housing Development Finance Corporation Ltd., ITC Ltd., and State Bank of India.
Investment Goals
Investing in a wide variety of different stocks and other equity-related instruments is going to help you reach your goal of achieving a consistent increase in capital value over the course of a longer length of time, which is the purpose of the strategy.
In addition to this, it gives investors the possibility of receiving income tax refunds in line with the law that is already in place regarding taxes.
Mirae Asset Tax Saver Fund Direct-Growth
One of the ELSS tax saving mutual funds known as the Mirae Asset Tax Saver Fund Direct-Growth is a fund made available by the Mirae Asset Mutual Fund.
The date of November 20, 2015, marks the beginning of the fund’s lifespan of seven years and eight months.
The Mirae Asset Tax Saver Fund Direct-Growth was classified as a medium-sized fund within its relevant category as of the 30th of June, 2023, based on the number of assets under management (AUM) that it possessed, which was valued at 16,634 Crores.
Cost and Returns
The expense ratio of the fund is 0.56%, which is much lower than the average cost ratio of ELSS’s comparable products.
During the preceding calendar year, the Mirae Asset Tax Saver Fund Direct-Growth achieved a return of 19.26%. Since its inception, the investment has provided an average annual return rate of 19.65%. Every three years, the amount of money invested in the fund grows by a factor of two.
The Mirae Asset Tax Saver Fund’s Direct-Growth strategy has a consistent capacity to deliver returns that are equal to those given by other funds in its category. There is just a bare minimum of capacity to manage losses if the market continues to decline.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the energy industry, the technology industry, the service industry, and the healthcare industry.
When compared to other funds that fall into the same category as it, the investment vehicle in issue has shown slightly lower levels of exposure within the Financial and Energy sectors.
The five biggest stakes in ICICI Bank Ltd., HDFC Bank Ltd., Reliance Industries Ltd., State Bank of India, and Infosys Ltd. may be found in the fund’s portfolio.
Investment Goals
Obtaining long-term capital appreciation is the objective of the program, which will be accomplished by the investment of funds in a diversified portfolio whose primary holdings will be stocks and other equity-related assets.
DSP Tax Saver Direct Plan-Growth
Dsp Mutual Fund provides investors with access to an equity-linked savings strategy (ELSS) in the form of the DSP Tax Saver Direct Plan-Growth.
The aforementioned fund will be active for a total of 10 years and six months, starting from the day it was established, which was January 1, 2013.
As of the 30th of June, 2023, the DSP Tax Saver Direct Plan-Growth has a number of assets under management (AUM) equal to 11,303 Crores, which places it in the position of a medium-sized fund within the category to which it belongs.
Cost and Returns
The expense ratio of the fund is 0.77%, which is much lower than the average cost ratio of other ELSS tax saving mutual funds.
During the preceding fiscal year, the DSP Tax Saver Direct Plan-Growth achieved a return of 19.30%. On an annualized basis, the investment has delivered an average return of 17.05 percent since its inception. Every three years, the fund has consistently grown by doubling the amount of money invested.
The consistency with which the DSP Tax Saver Direct Plan-Growth plan provides returns is comparable to that of other funds in the same category. In a sinking market, the capacity to limit financial losses is below average.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the automotive industry, the healthcare industry, and technology.
When compared to other products in the same category, the fund has shown slightly lower levels of exposure in the Financial and Technology sectors.
The fund’s portfolio is made up of the five holdings that account for the majority of its assets. These holdings are HDFC Bank Ltd., ICICI Bank Ltd., State Bank of India, Infosys Ltd., and Axis Bank Ltd.
Investment Goals
Through investments in a diversified portfolio that is primarily made up of shares and equity-related instruments issued by businesses, the plan’s aim is to seek capital appreciation over a period of time ranging from the medium term to the long term.
In addition, the program intends to provide participants the chance to deduct a percentage of their total income, in accordance with the restrictions that are stated in the law that governs taxes on income.
Parag Parikh Tax Saver Fund Direct-Growth
An Equity Linked Savings Scheme (ELSS) is being made available by Ppfas Mutual Fund under the name of the Parag Parikh Tax Saver Fund Direct – Growth.
The aforementioned fund will be available for use for a period of four years, beginning on the 7th of April 2019.
As of the 30th of June in 2023, the assets under management (AUM) for the Parag Parikh Tax Saver Fund Direct-Growth are valued at a total of 1,742 Crores. Within the context of its appropriate category, it is possible to describe it as a medium-sized fund.
Cost and Returns
The fund has an expense ratio of 0.84%, which is much lower than the average cost ratio of other ELSS tax saving mutual funds.
The Parag Parikh Tax Saver Fund Direct-Growth achieved a return equal to or higher than 21.17 percent during the previous calendar year. Since its inception, the investment has delivered an average yearly return of 23.29 percent. The fund has achieved an annual doubling of the amount of money that was originally invested.
The level of performance consistency provided by the Parag Parikh Tax Saver Fund Direct-Growth plan is comparable to that provided by the great majority of other funds in its category. There is a significant opportunity to prevent financial harm if market circumstances worsen.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the automobile industry, the consumer staples industry, and the energy industry.
When compared to other funds that fall into the same category, the investment vehicle in issue has shown much lower levels of exposure within the Financial and Technology sectors.
The following companies make up the top five holdings in the fund’s portfolio: Housing Development Finance Corporation Ltd., Bajaj Holdings & Investment Ltd., Axis Bank Ltd., and ICICI Bank Ltd. Maruti Suzuki India Ltd.
Investment Goals
The Scheme’s principal purpose is to generate a sustainable increase in capital value over a prolonged period of time by investing in a broad variety of shares and equity-related financial products.
This will be accomplished via a variety of investment strategies. The Equity Linked Saving Scheme, 2005 states that the Ministry of Finance has stated that 80% of the total assets have been allocated.
Canara Robeco Equity Tax Saver Direct- Growth
Canara Robeco Mutual Fund provides investors with access to an Equity Linked Savings Scheme (ELSS) in the form of the Canara Robeco Equity Tax Saver Direct-Growth.
The aforementioned fund has a maturity date of January 1, 2013, marking the beginning of its length of ten years and six months.
Canara Robeco Equity Tax Saver Direct-Growth fund has assets under management (AUM) value of 5,750 Crores as of the 30th of June, 2023. Within the context of its relevant category, it is regarded as a moderately large fund.
Cost and Returns
The expense ratio of the fund is 0.56%, which is much lower than the average cost ratio of other ELSS tax saving mutual funds.
During the previous calendar year, the Canara Robeco Equity Tax Saver Direct-Growth fund generated a return of 17.28%. Since its inception, the investment has delivered an annualized return of 15.73 percent on average. Every four years, the amount of money invested in the fund has risen by a factor of two.
The level of return consistency provided by the Canara Robeco Equity Tax Saver Direct-Growth plan is comparable to that provided by other funds in the same category. In a declining market, there is only a limited capacity to avert more losses.
Portfolio Composition and Top Holdings
The majority of the fund’s money is invested in businesses that are involved in the financial industry, the automobile industry, the energy industry, and consumer staples.
The fund has shown lower levels of exposure in the Financial and Technology sectors when compared to other products within the same category as it when compared to other products within the same category.
The fund’s portfolio is made up of its five biggest holdings, which are as follows: Housing Development Finance Corporation Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Infosys Ltd., and Reliance Industries Ltd.
Investment Goals
By directing most of the investments into equity securities, the program hopes to achieve its goal of achieving a steady rise in capital value over the course of time.
Additionally, it offers tax benefits in line with Section 80C of the Internal Revenue Code. The plan has the capacity to engage in foreign stock markets such as ADRs and GDRs, and the assets may be allocated in both the primary and secondary markets. In addition, a secondary market is an option for the plan.
Final Thoughts
Given that ELSS tax saving mutual funds are classified as equity-oriented funds, they inherently entail comparable degrees and types of risks as other equity mutual funds.
Nevertheless, the aforementioned dangers may be significantly reduced by maintaining investments for a minimum duration of five years.
Additionally, the implementation of a mandated lock-in period lasting three years serves as a substantial measure in mitigating risk.
The ELSS is deemed appropriate for individuals that possess a greater risk tolerance due to its main allocation of assets towards equities and equity-related products.
ELSS tax saving mutual funds prove to be a very advantageous investment option for those belonging to the higher income tax bands.
ELSS exhibits the most abbreviated lock-in time when compared to other investment options falling under Section 80C. Investing in ELSS may facilitate the accumulation of wealth while also providing tax-saving benefits.
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