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HDFC Tax Saver Mutual Funds

HDFC AMC offers 17 Tax Saver Mutual Fund with a total AUM belonging to Rs 444,379 crores as on December 2022 . 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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Best HDFC Tax Saver Mutual Funds to Invest in 2022

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Till Date CAGR
HDFC TaxSaver fund (G)
HDFC TaxSaver fund (G)

17.9%

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20.6%

21.4%

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Who Should Invest in HDFC Tax Saver Mutual Fund?

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. 

Recommended: Here You Can Find the Best Tax Saver Mutual Funds to invest in 2022

Things To Consider Before Investing in HDFC Tax Saver Mutual Fund

  • Investment Objective: HDFC Tax Saver Mutual Fund is an open-ended equity scheme with an investment objective of delivering long-term wealth creation and tax saving. The scheme allows tax saving under section 80C of the Income Tax Act, 1961. However, investors must identify their investment objective and align it with the fund objective to generate wealth during the period. 
  • Investment Strategy: HDFC Tax Saver Mutual Fund invests in a diversified portfolio of companies with growth potential and sustainable business models with a long-term perspective. The fund managers of HDFC Tax Saver Schemes will evaluate the fundamentals of the businesses while selecting the stocks of companies. Also,  this scheme will employ sufficient measures to minimise and control the risks involved in building a portfolio. Therefore, aligning investors’ strategy with the fund strategy is essential. 
  • Associated Risks: HDFC mutual fund’s Tax Saving schemes have certain risks associated with them. The value of the investment may go up or down depending on the numerous circumstances and forces affecting the capital and money markets. Also, the principal amount invested is at very high risk. HDFC Tax Saver Fund has the potential to deliver higher returns against the associated risks involved. Therefore, investors must understand these associated risks before investing in this scheme. 

Tax on HDFC Tax Saver Mutual Funds

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. 

Recommended: To visit and learn more about Tax on Mutual Funds