Investing and putting your money to work for you is the mantra of today’s times. With inflation destroying the value of our savings, investments are possibly the only tools available to us to ensure a secured future. However, nothing is free in this world – including investments. An investor has to account for charges and fees associated with his investment along with inflation and aim for a return that offers profits. The last hurdle of the profit-making race is tax. While some returns are clubbed with the annual income of the investor and are levied income tax, some others are taxed for the appreciation in capital. In this landscape of inflation, fees, charges and taxes, there are a set of schemes that offer tax deductions for investments made in them. These funds are call tax saving mutual funds.
In India, most of the tax saving funds are Equity Linked Savings Schemes (ELSS) and qualify for deductions up to ₹1,50,000 under Section 80C of the Income Tax Act. 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. Here is a look at the top best tax saving mutual funds in India.
Aditya Birla Sun Life Tax Plan
Investment Objective: An Open-ended Equity Linked Savings Scheme (ELSS) with the objective to achieve long-term growth of capital along with income tax relief for investment.
Launched on February 16, 1999, the Aditya Birla Sun Life Tax Plan has an asset allocation of around 98 in equity from which more than 50% is invested in mid-caps. As on October 31, 2017, the fund has assets of around ₹633 crore under management with an expense of 2.57% (as on September 30, 2017). The benchmark index is S&P BSE Sensex. Here is an overview of the performance:
|Aditya Birla Sun Life Tax Plan||34.76||37.23||16.01||21.89||9.71|
|S&P BSE Sensex||25.22||27.13||5.77||12.72||5.40|
Reliance Tax Saver (ELSS) Fund
Investment Objective: To generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments.
Launched on September 21, 2005, the Reliance Tax Saver (ELSS) Fund attempts to maintain a balanced approach between large and mid-cap companies with a significant exposure to MNCs. As on October 31, 2017, the fund has assets of around ₹9,983 crore under management with an expense of 1.98%. The benchmark index is S&P BSE 100. Here is an overview of the performance:
|Reliance Tax Saver (ELSS) Fund||40.01||38.45||13.21||23.25||13.29|
|S&P BSE 100||28.10||29.36||8.07||13.86||5.85|
Axis Long Term Equity Fund – Regular Growth
Investment objective: “The scheme aims to generate regular long term capital growth from a diversified portfolio of equity and equity related securities. The Scheme invests in companies with strong growth & a sustainable business model.”
Axis Long Term Equity Fund is an ELSS with a lock-in for three years. Launched on December 29, 2009, the fund has assets of around ₹15,223 crore under management with an expense of 1.97% (as on October 31, 2017). The benchmark is S&P BSE 200. Here is an overview of the performance:
|Axis Long Term Equity Fund – Regular Growth||31.11||30.53||12.54||23.11||–|
|S&P BSE 200||28.10||30.41||9.43||14.77||–|