ELSS Funds

Cut Your Taxes, Not Salary! Act now to Start your Tax Planning.

  • Total Funds 37
  • Average annual returns 24.46%

money-icon ELSS Funds

Cut Your Taxes, Not Salary! Act now to Start your Tax Planning.. More

  • Total Funds : 37
  • Average annual returns 24.46%

What is ELSS Mutual Fund?

ELSS funds is a category of mutual funds which invests predominantly in equity and equity-related securities. These funds park at least 65% of the total assets in the equity shares and securities across the market cap. As per the Section 80C of the Income Tax Act, 1961, several investment instruments are being listed out which provides a deduction from the total taxable income of the assessees. The ELSS Mutual Funds is one of those listed instruments in Section 80C that aims to provide the same benefits to the investors. By investing in these top ELSS Funds, one can claim a deduction from the total taxable income of an amount up to Rs.1.5 lakh.

So Equity Linked Savings Scheme (ELSS) is a good option for new as well as experienced investors. ELSS Mutual Funds assure long-term returns alongside tax deduction advantage. This category doesn’t have any restriction on maximum investment amount and age limit.

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ELSS Funds

ELSS Funds (Tax Saving) - Providing Capital Growth With Tax Benefits

Investing in ELSS funds is one of the best tax saving options providing tax deduction under Section 80C of the Income Tax Act. The tax saving plans are the best mutual fund investment plans which provide higher returns on the invested capital along with saving income up to Rs. 1.5 lakh to avail reduction in the tax liability. With a lock-in period of three years and investments made in the equity-related securities, These funds tend to provide the maximum benefits of earning wealth over time. Due to the maturity period of three years, the invested capital gets enough time to get enriched. To gain better understanding and know how ELSS funds provides higher earnings, read the content further.

10 Best ELSS Funds to Invest:

  • Axis Long Term Equity Fund
  • Franklin India Taxshield Fund
  • DSP Tax Saver Fund
  • Reliance Tax Saver Fund
  • ICICI Pru Long Term Equity Fund
  • Aditya Birla Sun Life Tax Relief ‘96 Fund
  • Invesco India Tax Plan
  • Principal Tax Savings Fund
  • Tata India Tax Saving Fund
  • IDFC Tax Advantage Fund

Why to Invest in ELSS Mutual Funds

Equity Investments Providing Capital Growth - Being a category in the equity asset class, ELSS funds provide the benefits of equity investments in the long run. As we know that equities generate tremendous growth for the investors, in the long term, the funds also provides the same benefit. It helps in earning huge wealth for the investors and appreciates the capital in order to attain the long-term investment goals. After beating market volatility, the schemes in the tax saving plans generate higher returns.

  1. Tax Savings Under Section 80C - The Income Tax Act provides tax deduction under Section 80C, and the best Equity Linked Savings Scheme Funds helps in attaining the same. One can easily avail the deduction up to Rs.1.5 lakh on the total income, and reduce taxes up to Rs.43650 in a financial year.
  2. Lowest Lock-In Period - There are various tax saving options in India, but ELSS Mutual Fund has the least lock-in of three years as compared to other alternatives. Accordingly, the money of the investors does not get blocked for a longer tenure, rather can be redeemed anytime after three years. In some other tax saving plans, the maturity is even up to fifteen years.
  3. No Capital Gain Tax - The ELSS Funds investments also provide the benefit of tax exemption on the income earned in the form of capital gain. This way, the investors need not pay any money to the taxman in terms of earnings from the sale of these funds.
  4. Dividend & Growth Option - The investors have the option to invest their money either in the dividend or growth option plan through SIP or lumpsum. The dividend plans are those wherein the investors earn dividend or income regularly, while in the case of growth option, these provide the capital appreciation after a period of time.

How to Select the Best ELSS Funds

ELSS funds are the ones that mainly tend to provide the benefit of claiming a deduction on the income. While selecting these schemes, one needs to be extra careful as several provisions and factors need to be kept in mind. Your must have an in-depth study of each and every tax saving option available to you. Don’t just go by mouth publicity. The reason being is that the ELSS mf suitable for one person may not have the same efficiency for the other. Thus, it is essential that before investing, one must carefully study the market position of all the tax saver schemes. The expert's team of MySIPonline shall provide you with the best benefit for the same. They will guide you about which Tax Saving scheme is best suited to your requirement and why you should opt for them.

5 Points to Know About ELSS Funds Before Investing

The Equity Linked Savings Scheme (ELSS) is a good option for new as well as experienced investors who want to utilise tax saving benefits and make big corpus side by side. ELSS Funds assure long-term returns alongside tax deduction advantage. This category doesn’t have any restriction on maximum investment amount and age limit, so any investor can utilise the benefits in these schemes and start investing as soon as possible. Here are some important points you should know before investing in an ELSS scheme.

  1. Shortest Lock-in Period : Under section 80C, there is a range of options to invest in order to save taxes and ELSS Funds has the shortest lock-in among them. The schemes in the category have 3-years lock-in which is lower than PPF (15-years) and NSC (5-years) under section 80C. Further, you are not restricted to invest for 3-years only as you can invest for a long-term horizon to seek benefit of capital appreciation as well.
  2. Can be First Investment as well : Even the new investors can start investing in this category and obtain benefits over a short to long-term horizon. Many experts advise such schemes to the new investors as they are the best option to enter the equity instruments. With three years lock-in, investors get the idea of the market volatility and become habitual of it.
  3. Maximum Deduction Benefit : You should know that the maximum deduction available is on investment amount of Rs 1.5 lakh. If you are investing more than the required amount in an ELSS scheme, you shouldn’t become cautious as it will ultimately give you returns in your favour from equity instruments.
  4. Aims for Maximum Returns : ELSS Funds have a maximum allocation in equity instruments which ensure stability in a long-term duration. You can also expect higher returns over a long-term horizon from the scheme by investing for more than 5 to 7 years. So, you can aim for higher yields as well.
  5. Involve High Risk : Due to equity instruments, investors are required to understand that ELSS funds involve high-risk factors. So, they should invest accordingly for a longer duration to reduce the overall risk and get higher returns.

Comparison of various investment avenues under section 80C based on the following parameters:

S.NInvestment Under 80CReturnsLock-in PeriodTax on Produced ReturnsLast Year Returns
1. ELSS Funds 15% to 18% 3-years Partially Taxable 13.62%(Last 3-Yr)
2. Public Provident Fund (PPF) 7% to 8% 15-years Tax-Free 7.6%(Jan-Mar 2018)
3. Fixed Deposit(FD) 6% to 7% 5-years Taxable 7% to 7.7%(Last 1-Yr)
4. National Pension Scheme (NPS) 8% to 10% Withdrew After Retirement 40% is Taxable 9.5%(Last 3-Yr)
5. National Saving Certificate (NSC) 7% to 8% 5-years Taxable 7.6%(Jan-Mar 2018)

Section 80C:

ELSS Funds under Section 80C of Income Tax Act, 1961 is proposed to provide tax saving benefits to an individual and HUFs (Hindu Undivided Families). If the income is invested in defined avenues, then they can get a claim up to Rs 1.5 lakh as a deduction from the total income in a financial year depending upon their tax slabs. With investment in defined investment/expenditure, an individual and HUF can reduce the total taxable income and the total payable tax. Section 80C has a long list of options such as ULIP, Life Insurance, Annuity Plan, PPF, NSC, Post office term deposit of 5-years, fixed deposits for 5-years and Senior Citizen Savings Schemes. For the investors, how to save tax query has been resolved with such a list of options offering tax deduction benefits. At present, most of the investors are considering tax saving mutual funds (ELSS) online as the best tax saving option as it provides comparatively higher returns with lowest lock-in period among all other options falling under Section 80C.

Who Should Invest in ELSS Funds?

As per the income tax slab, the assessees having income more than Rs.2,50,000 are required to pay taxes as per the rate applicable to them. Accordingly, the investors who come under the taxable slab and want to reduce their tax liability, should park their money in the ELSS funds. Furthermore, if you need to calculate your taxability, then you can use our ‘Tax Calculator’ which will help you in computing the exact sum payable for taxes and will also help you in planning how to reduce it. Investments in ELSS Scheme can be initiated with just Rs.500 and thus, investors have the benefit of starting SIP with a small sum of money and gain tremendous income.

ELSS Mutual Funds Online - Modes of Investment

The online investment is the best way to start investing in the best elss Schemes. We provide a wide range of online tools and solutions that will help you in making simplified investment. You can opt for the tax calculator, tax planning, best ELSS Mutual Funds and other solutions to make the right choice and start online investment in mf. The online SIP is further an additional solution that will simplify your investment journey and let you make better earnings with tax savings.

To provide you with the best-investing options in ELSS funds we are working day in and day out. You can trust our site as we include only those plans which are really worthy. Our experts have come up with the chart-buster schemes like, Axis Long Term Equity Fund (G), Reliance Tax Saver (ELSS) Fund (G), etc.

Must Read : Top 5 Tax Saver Mutual Funds To Invest in 2018

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Frequently Asked Questions

Are ELSS schemes taxable after 3 years?
Yes, ELSS Funds are equity-oriented scheme and is subject to LTCG of 10% on capital gains of more than Rs. 1 lac in a financial year.
Can you redeem from ELSS Funds before 3 years?
No. The units bought of an ELSS mutual fund can only be redeemed after completion of 3 years from the day of buying. Every unit should complete 3 years before it can be redeemed. It can neither be redeemed nor transferred before 3 years.
How much tax can be saved by investing in ELSS Funds?
It depends on your annual income and amount you invest In ELSS Tax Saving Mutual Funds. In the highest tax bracket, a maximum of Rs 45,000 can be saved per financial year.
Can I increase my SIP amount in ELSS Mutual Fund Schemes?
Yes. SIP amount in Tax Saving ELSS Funds can be increased either one time or periodically.
Can I invest more than Rs 1.5 lac in ELSS Mutual Funds?
Under section 80C, tax benefits from ELSS Funds will only be applicable up to Rs 1.5 lac. However, there is no maximum limit for investment in an ELSS Tax saving scheme.
What is the proof of investment in ELSS Funds?
As soon as the investment is made in an ELSS scheme, the mutual fund asset management company sends an account statement which can be used as a proof to claim tax deduction.

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