TAX SAVER FUNDS
A tax saving fund is a type of mutual where you get an additional benefit of tax saving. These types of mutual funds are eligible for tax deductions under the provisions of Section 80C of the Income Tax Act, 1961. Here you can claim a tax deduction of up to INR 1,50,000 and save taxes up to INR 46,800 in a year. These tax saver funds are also known as ELSS funds which stands for equity-linked savings scheme.
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Best Tax Saver Funds
Quant Tax Plan
Quant Tax Plan is an ELSS fund scheme offered by Quant Mutual Fund. This fund aims to generate long-term wealth for its investor by creating a diversified portfolio of equity and equity-related securities with high growth potential. This fund has consistently delivered good returns over the years. Also, this fund has a Sharpe ratio of 1.24. The higher the Sharpe ratio of a fund, the better its returns have been relative to the risk it carries.
Mirae Asset Tax Saver Fund
Mirae Asset Tax Saver Fund is an ELSS mutual fund scheme from Mirae Asset Mutual Fund. This fund aims to generate long-term wealth for its investor by creating a diversified portfolio of equity and equity-related securities with high growth potential. Since its inception, the fund has delivered 20.45% CAGR returns.
Canara Robeco Equity Tax Saver
Canara Robeco Equity Tax Saver is an ELSS mutual fund scheme offered by Canara Robeco. This fund aims to generate long-term wealth for its investor by creating a diversified portfolio of equity and equity-related securities with high growth potential. The fund makes investments both in primary and secondary equity markets and may also invest in ADRs or GDRs, which are the overseas markets dealing with investments in equity.
Invesco India Tax Plan
Invesco India Tax Plan is an ELSS mutual fund scheme from Invesco Mutual Fund. This fund aims to generate long-term wealth for its investor by creating a diversified portfolio of equity and equity-related securities with high growth potential. This fund has been in existence for 15 years, and it was launched on 20/11/2006. Since its inception, it has delivered a return of 15.14% CAGR.
UTI Long Term Equity Fund
UTI Long Term Equity Fund is an ELSS mutual fund scheme from UTI Mutual Fund. It is an open-ended equity fund that invests a minimum of 80% in equity-related instruments and a maximum of 20% in money market instruments and other liquid instruments. This fund aims to create long-term wealth for its investors by investing the majority of funds in equity and equity-related instruments.
DSP Tax Saver
DSP Tax Saver is an ELSS mutual fund scheme from DSP Mutual Fund. This fund aims to generate long-term wealth for its investor by creating a diversified portfolio of equity and equity-related securities. This fund has delivered consistent returns over the years and has invested majorly in the finance, technology, construction, energy, and chemical sectors.
Axis Long Term Equity
Axis Long Term Equity is an ELSS mutual fund scheme from Axis Mutual Fund. The scheme aims to create long-term wealth and capital growth for its investors by forming a diversified portfolio of equity and equity-related securities. This fund has allocated 78.56% of the money in large-cap stocks, 18.47% in mid-cap stocks, and 1.81% in small-cap stocks. Axis Long Term Equity invests in businesses with high growth and a sustainable business model.
Kotak Tax Saver Fund
Kotak Tax Saver Fund is an ELSS mutual fund scheme from Kotak Mahindra Mutual Fund. This fund makes investments in companies that have good financial strength, reputation, and a beneficial track record. The fund management selects companies that are relatively less prone to recessions or cycles.
Benefits of ELSS
Every investor wants to invest their capital in a scheme where they can get the additional advantages other than good returns. ELSS is one such scheme that provides an investor handful of benefits which makes it very attractive and lucrative. The advantages associated with ELSS are:
The investor cannot withdraw their invested amount during the fixed lock-in period, but they can only withdraw the dividend earned during that period.
Since the ELSS scheme is an open-ended equity fund, an investor can invest any time during the given year.
There is no upper ceiling to the limit of investment in the ELSS scheme, and this makes it even more appealing to big investors.
These funds are managed by highly skilled professionals who invest your capital after carefully analysing the market, thus improving the chances of higher returns.
Investors can either pay by lump sum or choose the Systematic Investment Plan (SIP), making the scheme flexible to all kinds of investors.
Who Should Opt for Tax
Saving Mutual Funds ?
Though there are several benefits associated with these funds, one should look for the entire picture before deciding on investment in the ELSS scheme. Since these funds are entirely dependent on the equity market, the risk is also higher; thus, if you have a high risk appetite and comfortable with the markets volatility, you can go for it. Saving tax is the schemes main objective, but since the increased risk is also involved, you should be careful about it. If you are looking to invest for a more extended period, you can invest in ELSS because it will help you overcome the markets short-term volatility. But if you are near the age of superannuation or hesitate with ups and downs of the market; you should better go for other safe investments. There is no upper limit of investment, but one should also keep in mind that returns over rupees 100,000 after three years will be taxed with 10 per cent.
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