HDFC AMC offers 25 Tax Saver Mutual Fund with a total AUM belonging to Rs 535,468 crores as on December 2023 . With the best elss tax saving fund and an investor can claim up to Rs 1.5 lakhs as a tax deduction against their investments under section 80C.
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HDFC Long Term Advantage Fund or ELSS is an equity-oriented mutual fund that invests in equity securities listed on the stock exchange. Hence, Tax Saver Mutual Funds are suitable for investors who seek long-term wealth creation and tax saving purposes. This fund allows a tax deduction up to Rs 1.5 lakhs under Section 80C of the Income Tax Act, 1961. However, investors must understand that there is a lock-in period of 3 years while investing in ELSS funds. Also, tax saving should not be the only reason to invest in HDFC tax saving mutual fund schemes. Moreover, the HDFC tax saving fund is not suitable for investors looking for regular income and liquidity in the form of a zero lock-in period.
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The tax treatment of HDFC Tax Saver Mutual Fund is similar to that of an equity mutual fund. The returns earned on the fund are taxable at the time of redemption or sale of such units. The taxability of capital gains depends on the period of holding. On the sale of units of HDFC Tax Saver Mutual Fund before 12 months, a short-term capital gain arises. However, due to the lock-in period, STCG is not applicable. A long-term capital gain will arise on sale after 12 months from the date of allocation of these units. The LTCG of up to Rs 1 lakh is tax exempt. Any LTCG on the HDFC Tax Saving Mutual Fund scheme is taxable at 10% above the exemption limit.
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