TOPICS :   Politics
Jay Patel
Jay Patel
Mar 6 , 2019 8 min read 1695 Views Likes 0 Comments


ELSS funds are an efficient way to save taxes as compared to all the other investment options available under Section 80C of the Income Tax Act.

What is ELSS?

Equity Linked Saving Schemes (ELSS) are funds that are managed by experienced finance professionals and are offered by fund houses. This means that your investment is handled by fund managers with the benefit of tax savings. So Basically they are types of Mutual fund.

How much can I Invest?

Section 80C of the Income Tax Act where one can invest up to INR 1.5 lakh in a financial year. You are free to invest more than this designated amount, but the excess over INR 1.5 lakh will not qualify you to avail the tax benefits under Section 80C. So tax saving Max's out at INR 1.5 Lakhs

Types of ELSS

There are two main categories of funds in ELSS; dividend fund and growth fund.

Growth Fund is long-term wealth creation platform for investors, where there are no regular payouts and the fund pays you only on redemption/ sale.

Dividend Fund has a regular Payout, so it is for investor's who want regular cash inflow. Under the Dividend Payout option, you will receive the dividend tax-free.

Why ELSS is better than other Tax saving options?

Greater Returns on Investment (ROI)

Given the investments in ELSS are made in the equity markets, the returns are much higher than most investment options with tax saving benefits in the longer run. This serves two purposes; Apart from saving you taxes, these funds also generate higher profits for you.

Shorter Lock-in Investment Tenure (3 Years)

ELSS, when compared to other tax saving investment options, have a lower lock-in period. This means unlike a Public Provident Fund, National Savings Certificate, and Employee’s Provident Fund, all of which require a minimum of 5 years lock-in period, ELSS has just a 3-year lock-in.

Tax Saving

Not all investments in mutual fund qualify for tax deductions, You can save tax by Investing ELSS based Mutual funds schemes only.

The risk involved with ELSS is higher when compared to a Fixed Deposit or a PPF but the returns are potentially higher as well.

Top 10 ELSS Funds

These are top 10 funds as Identified by us on the basis of returns, current portfolio, fund managers, expense ratio relative to performance etc however this is a subjective list and you might funds which may perform better too.

These are not recommendations to buy, kindly consult your investment advisor before buying.

Note: MF schemes are arranged in Alphabetical order and not in any rank

Happy Investing!
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