Best ELSS Funds - Tax Saving Mutual funds

In India, people are always in search of instruments that offer them the benefit of tax savings. To meet this need of investors, mutual funds came up with the tax-saving scheme known as Equity-Linked Saving Scheme (ELSS). This is an open-ended equity-oriented scheme with a statutory lock-in period of three years. As per SEBI, the scheme invests at least 80 per cent of its total assets in equity and equity-related instruments (in accordance with Equity Linked Saving Scheme, 2005, notified by Ministry of Finance). Tax benefit is the most attractive aspect of these funds, with investors getting tax exemption up to Rs 1.5 lakh u/s 80C of Income Tax Act, 1961.

Below are some of the top ELSS-Tax Saving Funds.

Best Equity MF (ELSS (Tax Savings))

Here is the list of best equity MF in last one year

What you should know before investing:

  • ELSS funds have a lock-in period of three years and, therefore, it is mandatory to remain invested for at least 3 years. Of course, you can remain invested for more than three years. It is recommended to invest your money in this fund for a longer period of time as the returns on these funds are dependent on the market, which is volatile in nature in the short term. You may not get the desired returns in a 3-year time period and there are chances of even incurring losses. So, it is better to remain invested for a longer period of, say, 5-7 years.
  • ELSS funds come under high-risk category as these funds invest in equity and, therefore, the risk is higher as compared to other tax-saving schemes. Investors who wish to invest in these schemes should first assess their risk appetite and only then decide whether to invest or avoid.
  • As the name suggests, these funds invest a major chunk, i.e., 80 per cent, of their total assets in equity. They diversify their portfolio of investments by investing in various companies across different sectors of the economy so as to deliver optimal returns.

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