Tax Saving Mutual Funds - All You Need to Know About 5 ELSS for Good Return

While there are several investment options eligible for Section 80C deductions up to Rs 1.5 from taxable income in a year, an increasing number of taxpayers consider investing in ELSS.Here are some of the top reasons that make ELSS funds one of the best tax-saving investment options.

It is the only type of aggressive investment option that is eligible for 80C deductions. Most other schemes such as Public Provident Funds, National Savings Certificate, do not carry the inflation-beating return potential like ELSS mutual funds. Moreover, you can always balance your portfolio by considering other investment options eligible for 80C deductions.

Amongst all the 80C eligible investments, ELSS schemes have the lowest lock-in period of just 3 years. In comparison, PPF has a maturity period of 15 years, NSCs mature after 5 or 10 years, and even tax-saving FDs have a lock-in of 5 years. ELSS only comes with a 3-year lock-in

ELSS being equity-oriented mutual funds come in various shapes and forms. You can choose to opt for a large-cap ELSS fund or a mid-cap fund based on your risk appetite and goals. Thus, it allows you flexibility which is missing in most other forms of 80C investment options.

If you cannot invest a lump sum amount right now, you can also start a SIP with as little as Rs. 500 per month in any ELSS of your choice. You are free to select the SIP amount and even the duration for which you’d like to continue investing. SIPs do not have any fixed investment duration.If you are looking for tax savings through mutual funds, this is another reason that makes ELSS one of the best choices.

If you are ready to invest in ELSS to save taxes and experience all the valuable benefits listed above, it is time for you to start searching for the best ELSS. There are now several fund houses in India that offer multiple ELSS funds.To pick the best, ensure that you select a reputed fund house and focus on factors such as the historical performance of the scheme, returns consistency across market cycles, and expense ratio. Do consider your age and risk appetite as the portfolio concentration and the related risk could significantly vary between two ELSS funds.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.