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Save ₹45,000 in Taxes with Tax Saving Funds

A tax saving mutual fund, also called Equity Linked Savings Scheme (ELSS), is a mutual fund scheme that invests in equity & equity related securities.

  • Average returns around 15% in last 3 years, better than Fixed Deposit or PPF

  • Has a lock in period of 3 years only

  • Invest upto Rs 1,50,000 in these funds as per Sec 80C

Benefits of Investing in Tax Saving Mutual Funds

Equity Linked Savings Scheme (ELSS) is a diversified equity mutual fund. It invests your money in equity shares of companies across market capitalisation i.e. large-cap/mid-cap/small-cap. Such diversification helps to wade through turbulent markets and keep your returns in line with your expectations.

Lowest Lockin period

Compared to other tax-saving options, ELSS has the lowest lock-in period of 3 years. Being an equity fund, it will be advisable to stay invested for a longer duration.

Best Tax saving investment under Sec 80C

It helps you to avail tax deduction under Section 80C in the EEE format i.e. tax exemption, wealth accumulation and zero exit load.

Option to invest monthly

You can start investing using SIP of as low as Rs 1000. Moreover, there’s no upper limit on amount of investment.

2x Higher returns than FD / PPF

As compared to the conventional FDs, ELSS gives higher returns to beat inflation in an efficient manner.

Comparison between with other Tax Saving Investments

There are several other savings schemes that helps in wealth creation like FD, PPF and NSC to name a few. But the returns from these schemes are taxable. This is where ELSS ( Tax Saving Mutual Funds) stands out with its dual-benefit – its returns are generally higher and tax-free. This coupled with a mere lock-in period of 3 years is all the more reason for you to invest in ELSS ( Tax Saving Mutual Funds ) now. Here is a quick glimpse at how ELSS is superior to other commonly used tax-saving investments :-

Investment Returns Lock-in Period Tax on Returns
5-Year Bank Fixed Deposit 6% to 7% 5 years Yes
Public Provident Fund (PPF) 7% to 8% 15 years No
National Savings Certificate 7% to 8% 5 years Yes
National Pension System (NPS) 8% to 10% Till Retirement Partially Taxable
ELSS Funds 15% to 18% 3 years No

As a tax-paying citizen, the Section-80 of the Indian Tax Act allows you some breather – a deduction of up to Rs. 1,50,000 from your total annual income.

Disclaimer: Mutual fund investments are subject to market risks. Please read the offer documents carefully before investing.

Best performing Tax Saving Funds

Many investors start their investment journey through an ELSS to save taxes. Eventually, they start spreading their investments once they get a better understanding of various available schemes. Sometimes it becomes difficult for an investor to compare all the above parameters and choose a mutual fund accordingly. ClearTax can help you here by handpicking the most suitable and best performing investment portfolios for you based on your financial goals.

Mutual Funds Launch Date 1-Year 3-Year 5-Year 10-Year
Axis Long Term Equity Fund Dec 2009 22.07 8.94 22.49
Aditya Birla Sun Life Tax Relief 96 Feb 1999 27.34 11.33 20.75 10.84
Reliance Tax Saver Fund Sep 2005 20.69 7.8 22.1 14.82
DSP BlackRock Tax Saver Fund Jan 2007 16.52 11.84 19.74 11.73
*Historical performance of different mutual funds as of Feb 2018

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