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Best ELSS Mutual funds to invest for tax savings in 2013 Best ELSS Mutual funds to invest for tax savings in 2013

Many of the investors are doing their tax planning from Apr itself instead of thinking during Dec/Jan. While there are several tax savings investment options, one of the best investment options for tax planning which has potential to provide more returns are Equity Linked Tax saving schemes (ELSS). In this article we would discuss about these equity linked saving schemes and how they can be used to enhance our returns through such investments.

Equity Linked Saving Schemes (ELSS) mutual funds

In simple terms Equity linked saving schemes (ELSS) are those which provide the investor, tax exemption/rebates under section 80C. Under this section, a tax payer can get exemption up to Rs 1 lakh by investing in various investment options like PPF, ELSS, Tax saving FD, NSC etc., However all investment options provide returns around 7% to 8.5% apart from tax saving. Investment in Top ELSS mutual funds provides greater chances to increase your investment apart from getting tax savings.

Where does equity linked saving schemes (ELSS) invest?

ELSS saving schemes invest 65% of its portfolio in equity related investments and are notified to avail tax benefits.

Also Read: Complete guide on National Saving Certificate (NSC) to save tax

Why should you invest in Best ELSS mutual funds?

Chances for higher returns : While you would get fixed returns in other tax saving options, if you invest in Best ELSS mutual funds, the returns would depend upon the equity markets and mutual fund scheme performance and there are greater chances that you would get higher returns compared to other tax saving options.

Tax saving option : Investment up to Rs 1 lakh in ELSS can be claimed for tax rebate under section 80C

Lock-in period helps for higher returns : The lock-in period for ELSS mutual funds are 3 years. For such tenure, there are higher chances that your mutual fund scheme performance generates more returns.

Tax free returns : The returns from all tax saving options except for PPF are not tax free. Means the returns on such investment options are taxable. E.g. The returns from NSC are taxable. It can be claimed thru 80C as deduction which is a different question. Returns from ELSS are tax free as the investment period is 3 years and any returns from equity mutual fund for more than one year is not taxed.

Best ELSS mutual funds to invest for tax saving

We have analyzed 4 best ELSS mutual funds which can be invested for tax planning purpose. However, instead of investing a lump sum amount, invest in these top ELSS mutual funds through SIP to get higher returns.

1) Axis Long Term equity:

  • Axis Long Term equity (qualified for tax saving mutual fund) has been ranked by Crisil as Rank-1 and as 3 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 11.3% in 3 years period and 19.5% in the last 1 year.
  • Assets under management are Rs 369 Crores, end of the last quarter which indicates that it gained investors confidence. This is one of the best ELSS mutual funds.

2) Can Rebeco Equity Tax Saver:

  • Can Rebeco tax saver have been ranked by Crisil as Rank-2 and as 5 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 10.7% in 5 years and 6.5% in 3 years period and 14.6% in the last 1 year.
  • Assets under management are Rs 506 Crores, end of the last quarter which indicates that it gained investors.

Also read: Latest info on Post office saving schemes in India

3) Franklin India Tax Shield:

  • Franklin India Tax Shield has been ranked by Crisil as Rank-2 and as 4 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 7.7% in 5 years and 7.9% in 3 years period and 13.7% in the last 1 year.
  • Assets under management are Rs 905 Crores, end of the last quarter which indicates that it gained investors.

4) Reliance tax saver:

  • Reliance tax saver has been ranked by Crisil as Rank-3 and as 5 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 8.5% in 5 years and 6.5% in 3 years period and 10.9% in the last 1 year.
  • Assets under management are Rs 2104 Crores, end of the last quarter which indicates that it gained investors confidence. This is one of the top ELSS mutual funds in terms of stability.

Invest In Top Tax Saving/ELSS Funds Online Today.

Conclusion : Investment in these best ELSS mutual funds provides tax savings and tax free returns. Instead of investing a lump sum, invest through SIP in these funds from beginning of the financial year and do the tax planning.

Readers, I would invite your views about this article.

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Suresh
Best ELSS Mutual funds to invest for tax savings in 2013

44 comments

  • Venu

    Hi suresh! Your suggestions are very good. I have ICICI bank account and I am ready to invest RS2000 in mutual fund particularly to save tax as well as for good returns. Shall I invest thru this bank or any other bank? Will they charge high? Pls advice.

    • Venu, If you want to invest in tax saving investment option through ICICI Bank, you can do that by investing in tax saver fixed deposit. What you are seeing this article is tax saving muttual funds. You need to open mutual fund account with any broker like fundsindia.com or ICICI direct.com and purchase ELSS mutual funds to save tax.

  • Satyain

    Hi Suresh,

     I’m planning to invest in ELSS Mutual Funds. I’m confused  to choose between Divinded and Growth plans.  Could you please  tell me which is the best  plan.

    Thanks and Regards,

    Satya

    • Hi Satyain, If you do not want any regular income, you can invest in growth funds so that any returns would get re-invested and you would get profits only after you sell them. 

  • namdev

    Hi suresh, my friends are suggesting me to invest in Relaince Tax Saver. I need your guidence as you have good knowledge of investment. shuold i go for Relaince ?

    • Reliance tax saver is Crisil-3 ranked ELSS mutual fund. You can invest, but there are other better funds like HDFC long term advantage or Can Robecco tax saver. You can try them too.

  • Shreya

    I have a HDFC tax-saver growth plan. The locking period for the plan is completed should I continue to top up or when can I redeem the amount.

    Also which are other good ELSS plans I can got for. Please can you be specific mentioning the amount and period i should opt.

     

    Sorry but I dont have that much knowledge under this subject

     

    Please can you suggest

    • Shreya, Generally investors invest in ELSS only for tax purpose. However HDFC Tax saver growth plan is not doing good. In last 3 years it generated less than 0.5% annaulised returns. You may check and exit from such schemes. Here is the link where i recommended top ELSS funds. You can invest for 3 to 5 years period to get good returns.  https://myinvestmentideas.com/2013/05/best-elss-mutual-funds-to-invest-for-tax-savings-in-2013/

      • Shreya

        Suresh, Thanks for the reply

        I was investing in HDFC tax saver growth as a SIP plan. Also ELSS and SIP are the same as SIP too qualify for tax exemptions? Please can you clarify the difference between ELSS mutual fund and SIP mutual funds.

        Also I have 6 lacs to invest. Please can you help me to make my portfolio to invest the amount. We are also considering some real estate options.

         

        Please can you advise

        • Mutual funds are various types like diversified, large cap or ELSS funds. SIP is an option to invest. You can invest ELSS funds in lumpsum (one time) or SIP through month on month. You can diverisify your portfolio by investing in real estate. If you are planning to invest a lumpsum, currently invest in debt mutual funds or balanced mutual funds. If you want to invest thru SIP, invest in large cap and diverisified for long term to get real benefit.

  • Rajanandan

    Suresh, amazing to see many articles on investments to maximise money and especially on mutual funds with tax saving options. Below is my porfolio and want to invest more Rs.5000 in mutual funds through SIP for next 10 years.

    UTI Opportunities Rs. 1000 from Nov 2012

    HDFC Balanced Fund- Growth Rs. 1000 from Nov 2012

    ICICI Pru Discovery Fund – Reg Plan – Growth    Rs. 1000 from Feb'13.

    Thinking to invest in

    ICICI Pru Focus Blue chip Rs. 2000

    Increase Rs. 1000 in UTI Opportunities Fund

    Can Rebeco Equity Tax Saver Rs. 2000

    Please advise if can i go with above portfolio or do i need to do any changes. Hoping for high returns with Moderate returns.

    • Rajanandan, Good portfolio. However if you want to get higher returns, take some risk and add SBI FMCG or Reliance Pharma fund. These are high risk, but you can consider a small portion of 5% to 10% in your portfolio for sector funds, which would add flavor to your portfolio.

      • Rajanandan

        Thank you soo much you looking into my portfolio and for your response. If i take SBI FMCG or Reliance Pharma which fund should be stopped and how much should i invest?

    • Rajanandan

      Thank you soo much you looking into my portfolio and for your response.

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