As the tax season approaches, you will be planning to park yours savings in various investments instruments which offer tax benefits under Section 80C of the Income Tax Act. Keeping this in mind, we have identified five best ELSS funds for you which will generate decent returns over the lock-in period of three years and restrict losses in the phase of downturns.

What is ELSS ?

ELSS is a type of diversified equity mutual fund, qualified for tax exemption under section 80C of the Income Tax Act. It offers two advantages - capital appreciation and tax saving benefits, and comes with a lock-in period of 3 years.

Why ELSS ?

ELSS lock-in period of 3 years is the lowest lock-in period among the tax saving instruments, compared to – PPF (15 years), NSC (6 years), and Bank Fixed Deposits (5 years). It also provides an easy entry with a minimum investment requirement as low as Rs. 500. This being a mutual fund variant provides the benefit of diversification while participating in equity markets. Investing into equity related instruments demands a long-term holding period to ensure relatively stable and good returns. And ELSS provides this option.

There are options of both Lump sum (bulk or one time) and Systematic Investment Plans (phased and in installments) - both modes of investments into mutual funds.

Go beyond tax saving

While the lock-in period is 3 years from the point of view of tax savings, it is suggested that investors need not link ELSS investments just to their 3 year investment requirements. It is advisable that investors consider these schemes for a longer term investment perspective that is more than 3 years. The performance of ELSS schemes substantiates this proposition. The data below shows that ELSS schemes have given superior returns in a longer term perspective - 5 years, compared to a 3-year horizon.

It is quite evident that ELSS schemes have generated substantial alpha over the indices like NIFTY and Sensex over a 5-year and 10-year horizon. So ELSS schemes can be considered not only for tax saving purpose, but also as an investment planning option for certain goals in life.

Salient Features of ELSS

1)ELSS is a type of mutual fund equity scheme
2) It is an open-ended equity fund – Investors can invest into this fund any day
3) Provides tax benefits under Section 80C of Income Tax Act 1961
4) Maximum tax benefit is to the tune of Rs. 1 Lakh under Section 80C (No ceiling on maximum amount for investment)
5) ELSS has exposure to equity and equity related instruments
6) Suitable for all risk profiles where a reasonable amount of equity can be taken
7) Any dividend received by the investor or any long term capital gains earned by the investor is tax free


Fund Name Star Rating 1 Yr 3 Yrs 5 Yrs Invest Online
Axis Long Term Equity Fund 4 Star 37.44% 13.36% 23.05% Invest Online
Reliance Tax Saver (ELSS) Fund 3 Star 46.04% 13.92% 22.87% Invest Online
DSP Blackrock Tax Saver Fund 4 Star 36.29% 16.57% 20.80% Invest Online
Aditya Birla Sunlife Tax Relief 96 5 Star 43.12% 17.36% 22.20% Invest Online
Franklin India Tax Shield 3 Star 29.11% 12.06% 18.58% Invest Online
                                                                                                                                                                                 Returns as on 31st December 2017


Axis Long Term Equity Fund (Benchmark : S&P BSE 200)      Download Form       Invest online    

Reliance Tax Saver (ELSS) Fund (Benchmark: BSE 100)   Download Form       Invest online  


DSP Black Rock Tax Saver Fund (Benchmark: BSE 100)   Download Form       Invest online 


Aditya Birla Sun Life Tax Relief 96  (Benchmark: BSE 200)  Download Form      Invest online 


Franklin India Taxshield (Benchmark: S&P CNX 500)  Download Form      Invest online 

ICICI Prudential Long Term Equity Fund (Tax Saving) (Benchmark: Nifty 500)   Download Form       Invest online


*Mutual fund investments are subject to market risk please read offer document carefully before investing. Above suggestion of schemes are based on performance and long term analysis.

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