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Invest in Tax Saving Mutual Funds
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The Equity Linked Savings Scheme (ELSS), also called Tax Saving Mutual Funds, is a Mutual Fund Investment that invests in Equity & Equity Related Securities.
Save on Taxes
Save almost Rs. 47,000 in Taxes with these Tax Saving Fund.
High Investment Limit
With Investments up to Rs 1,50,000 as per Section 80C.
Higher ROI
Returns between 15-18% in the past 3-years.
Best Tax Saver
Earn Returns better than any NPS, PPF or other Tax Saving Schemes.
Least Lock-in Duration
With a Lock-in period of 3-years only, less than NPS, etc.
Operate Online
To open and operate each and every FD or NSC, you would need to visit Bank, Post Office in person. Not so with Mutual Funds.
| Best ELSS Funds | 3-Year Returns | 5-Year Returns | ||
|---|---|---|---|---|
| Aditya Birla Sun Life Tax Relief 96 – Regular – Growth |  | 11.47% | 16.17% | |
| Axis Long Term Equity Fund – Regular – Growth |  | 12.52% | 16.07% | |
| DSP Tax Saver Fund – Regular – Growth |  | 12.58% | 14.69% | |
| ICICI Prudential Long Term Equity Fund (Tax Saving) – Regular – Growth |  | 11.12% | 12.76% | |
| Edelweiss Long Term Equity Fund (Tax Savings) – Regular – Growth |  | 9.05% | 11.4% | |
| Reliance Tax Saver (ELSS) Fund – Regular – Growth |  | 6.41% | 11.31% |
**The Returns given in this articles have been based on the data as on March 29, 2019. Please check the latest info by clicking on the respective links.
Benefits of Investing in Tax Saver Mutual Funds
When an investor invests money in ELSS or any other Top Mutual Funds in India, the invested capital is added to a pool. The pool consists of money from many investors. The portfolio pool of Mutual Funds is then invested in the equity market in a balanced and diversified way. Under ELSS, the tax saving mutual funds, most of it is invested into the stocks and shares of companies and the remainder into fixed income securities like bonds. The stocks of companies may be chosen across market capitalization i.e. Large-Cap/Mid-Cap/Small-Cap. This depends on the Prospectus of the Mutual Funds Scheme.
For instance, a Portfolio may contain:
- Automotive industry – 6.56%
- Power – 5.92%
- Pharmaceuticals – 9.99%
- Banks – 17.56%
- Consumer durables – 5.34%
- Consumer non-durables – 5.66%
- IT – 8.93%
The diversification helps to wade through market fluctuation, keeping the returns high.
Most Tax Saving investment under Sec 80C
With ELSS, the taxpayers can reduce their taxable income by Rs.1,50,000 under Section 80C of the Income Tax Act, 1961. Moreover, income earned at the end of the investment tenure is also exempt from taxation if it’s less than Rs.1 lakh. The income over Rs.1 lakh is taxable at 10% under the Long-Term Capital Gains (LTCG) tax.
Higher returns than NPS/FD/PPF
When compared with the conventional schemes of savings, ELSS gives higher returns to beat inflation in an efficient manner. Whether it is NPS, PPF or FDs. ELSS earns the highest possible returns than any other tax saving investment (as proven by historical ELSS performance data).
Lowest Lock-in period
Compared to other tax-saving options, ELSS has the lowest lock-in period of 3 years. Whereas the other traditional tax-saving options come with a minimum lock-in period of 6 to 15 years.
Options of SIP
Investors can invest on a monthly basis via SIPs (Systematic Investment Plan) thereby negating the need to invest in one go. in other words, a Lump Sum investment is not required, and all the tax benefits still apply. Besides, you can start your Best SIP Plan with as low as Rs. 500-1000. With no upper limit on the investment amount.
Comparison
Many other tax-saving investment options have been available in the market, like PPF, FD, NSC to name a few. All these have been, traditionally, helping people with investments, wealth creation, and tax-savings. Under Section 80C, only Rs. 1,50,000 of the total investments with these conventional instruments and Mutual Funds, is exempt. On one hand, the Returns from the conventional schemes are taxable. Whereas, Returns from ELSS are tax-free if less than Rs. 1 lakh. Added to this is the Higher Amount of Returns that these ELSS Mutual Funds give you, who would not prefer to invest in them??
On top of all that, the least lock-in duration makes them a not-to-miss opportunity of Tax-Saving.
To have a quick comparison and understand how ELSS is a much better option, please do check below:
| Investment Scheme | Lock-in Period | Returns | Tax Applicable |
|---|---|---|---|
| NPS (National Pension System) | Till Retirement | 8-10% | Partially Taxed |
| PPF (Public Provident Fund) | 15-years | 7-8% | No |
| Bank FD (Fixed Deposits) | 1-years (e.g.) | 6-8% | Yes |
| NSC (National Saving Certificates) | 5-years | 7-8% | Yes |
| ELSS Funds | 3-years | 15-18% | Partially Taxed |
Best Performers
Getting your money to work and grow for you is the new mantra. This is the reason a lot many new investors are opting to start their investment journey with ELSS. This not only gives them an opportunity to save taxes, but the benefits from these mutual funds are also manifold. ELSS, with its Low Lock-in period, Higher Returns and Ease of Operations, are in high demand these days. Investors, once they get familiar with the terms, process, etc by investing in Mutual Funds, start understanding the market better. And eventually, start diversifying their own investment portfolio by themselves. However, most of the time, it entails a huge task to compare and choose from all the MF options available.
With WealthBucket, you can rest easy and focus on your work, family, and friends. Allow us to suggest the most suitable and best-performing tax saving mutual funds investment portfolios based on your financial objectives. WealthBucket offers you:
Ease of Investing: We will ask for minimal information. Investment Goal, Duration, Amount to Invest and Risk Appetite. Rest let us suggest you the options that are and have been the Top-performers. You can also compute the amount, duration, etc with the help of our SIP Calculator, Lump Sum Calculator, etc.
Paperless: Get Registered with us, complete your KYC and Invest. Less than 10 minutes required.
Investment Proof: You get to download Investment Proof instantly. You may want to show it to your HR (for ITR filing) or keep it as a reference.
Easy Monitoring: You can check the growth of your investment online, anytime anywhere. In fact, we suggest you track your funds and all inputs/feedbacks are welcome.
Ease of Withdrawal: Withdraw at any time, online, by a single click. Though it is advisable to complete the Lock-in duration.
Security: Your money, investment, and not to mention your personal details, are completely safe with us.
So what are you waiting for??
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