Top ELSS mutual funds with tax saving benefits that offer higher return
The equity-linked saving scheme (ELSS) mutual funds focus primarily on equities and offer tax benefits to investors, making it a popular investment choice for those looking for tax saving options.
We are in that time of the year when taxpayers are on the lookout for the best ways to save their tax. Investors are looking for tax-saving investment instruments as the deadline for filing Income Tax Return (ITR) is approaching. Mutual fund investments could be a good option for you if you are looking for both tax benefits and higher return compared to traditional savings instruments.
The equity-linked saving scheme (ELSS) mutual funds focus primarily on equities and offer tax benefits to investors, making it a popular investment choice for those looking for tax saving options. It is one of the choices to save tax under Section 80C of the Income Tax Act 1961.
The ELSS mutual funds come with a lock in period during which the investors can’t withdraw their money. For most of the ELSS MFs the lock-in period starts at 3 years.
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Other tax-saving investments including the public provident fund (PPF), national savings certificate (NSC), and fixed deposits (FDs) have longer lock-in periods than ELSS MFs and hence it could be a better option for those who are looking for a short term investment horizon.
You can start investing in tax saving mutual funds through systematic investment plan (SIP) with as low as Rs 1,000 per month.
Here’s a list of some of the top performing ELSS MFs:
SBI Long Term Equity Fund
In one year, the SBI Long Term Equity Fund direct plan gave a return of 22.88 per cent, compared to 22.10 percent for the other schemes. The fund invests 92.5 per cent of its assets in domestic equities, of which 59.01 per cent are companies with large cap values, 14.04 per cent are stocks with mid-cap values, and 9.32 per cent are stocks with small cap values.
JM Tax Gain Fund
The fund invests 97.55 per cent of its assets in domestic equities, of which 17.5 are small cap companies, 16.64 per cent are mid cap stocks, and 37.43per cent are large cap stocks. In the one year, the JM Tax Gain Fund's direct plan returned 20.05 per cent, compared to 18.9 per cent for the ordinary plan.
Kotak Tax Saver Fund
In the one year, the Kotak Tax Saver Fund direct plan gave a return of nearly 19.9 per cent, while the non-ELSS plans gave a return of 23.57 per cent. Since its inception it has grown at a compound annual growth rate (CAGR) of 15.49 per cent.
HDFC Taxsaver Fund
In one year, the HDFC Taxsaver Fund direct plan gave a return of 19.78 per cent while its standard plan returned 19.04 per cent. The fund has a total of 95.4 per cent investment in domestic equities, which include 69.39 per cent in large cap stocks, 9.01 per cent in mid cap and 4.32 per cent in small cap companies.
Bandhan Tax Advantage (ELSS) Fund
In the past one year, the Bandhan Tax Advantage (ELSS) Fund Regular Plan has given a return of 19.78 per cent. This tax saving fund has 93.84 per cent investment in domestic companies.
ITI Long Term Equity Fund
In comparison to 17.09 per cent return from non-ELSS plans, the ITI Long Term Equity Fund Direct Growth plan has given a return of 17.66 per cent in the last one year. The fund invests 97.16 of its capital in domestic equities.
Motilal Oswal Long Term Equity Fund
In the last one year, the Motilal Oswal Long Term Equity Fund's direct plan gave a return of 25.11per cent while the regular plan gave a return of 23.57 per cent.
Bank of India Tax Advantage Fund
The Bank of India Tax Advantage Fund direct plan has given a return of 19.30 per cent whereas its conventional plan only returned 17.90 per cent.
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