Best Tax Saving Mutual Funds in India to Invest in 2021
Best Tax Saving Mutual Funds - Consider the best performing tax saving mutual funds to invest in 2021 with Scripbox.com. Find the list of best tax saving mutual funds in India on the basis of Returns, Latest Nav, Ratings, Performance etc
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Recommended
2 funds
Scripbox algorithm recommends 2-4 funds for investment for an investment asset class such as large cap, diversified, liquid etc. When you invest for an objective, the algorithm suggests the appropriate asset class and funds.
Best Tax Saving Mutual Funds

Motilal Oswal Long Term Equity Fund (Growth)
Tax Saving
Recommended
Top Ranked
₹ 1,784 Cr
Fund Size
3.97%
3Y return

Mirae Asset Tax Saver Fund (Growth)
Tax Saving
Recommended
Top Ranked
₹ 5,044 Cr
Fund Size
10.81%
3Y return
Save Taxes, Build Wealth
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ICICI Prudential Long Term Equity Fund Tax Saving (Growth)
Tax Saving
Top Ranked
₹ 7,276 Cr
Fund Size
7.45%
3Y return

Aditya Birla Sun Life Tax Relief 96 Fund ELSS U S 80C of IT ACT LSP (Growth)
Tax Saving
Top Ranked
₹ 12,118 Cr
Fund Size
4.78%
3Y return

Invesco India Tax Plan (Growth)
Tax Saving
Top Ranked
₹ 1,280 Cr
Fund Size
8.68%
3Y return

Axis Long Term Equity Fund (Growth)
Tax Saving
Top Ranked
₹ 25,618 Cr
Fund Size
12.42%
3Y return

Nippon India Tax Saver ELSS Fund (Growth)
Tax Saving
Top Ranked
₹ 9,987 Cr
Fund Size
-6.44%
3Y return

BOI AXA Tax Advantage Eco fund (Growth)
Tax Saving
Top Ranked
₹ 350 Cr
Fund Size
9.71%
3Y return

DSP Tax Saver Fund (Growth)
Tax Saving
Top Ranked
₹ 7,014 Cr
Fund Size
7.12%
3Y return

Canara Robeco Equity Taxsaver fund (Growth)
Tax Saving
Top Ranked
₹ 1,333 Cr
Fund Size
13.11%
3Y return

SBI Magnum Long Term Equity Scheme (Growth)
Tax Saving
Top Ranked
₹ 8,185 Cr
Fund Size
4.71%
3Y return

BOI AXA Tax Advantage fund (Growth)
Tax Saving
Top Ranked
₹ 350 Cr
Fund Size
8.93%
3Y return

L&T Tax Advantage Fund (Growth)
Tax Saving
Top Ranked
₹ 3,360 Cr
Fund Size
3.57%
3Y return

HDFC Long Term Advantage Fund (Growth)
Tax Saving
Top Ranked
₹ 1,237 Cr
Fund Size
5.57%
3Y return

Franklin India Taxshield Fund (Growth)
Tax Saving
Top Ranked
₹ 4,053 Cr
Fund Size
4.14%
3Y return

IDFC Tax Advantage ELSS Fund (Growth)
Tax Saving
Top Ranked
₹ 2,512 Cr
Fund Size
3.77%
3Y return

Aditya Birla Sun Life Tax Relief 96 fund (Growth)
Tax Saving
Top Ranked
₹ 12,118 Cr
Fund Size
4.78%
3Y return

Kotak Taxsaver Fund (Growth)
Tax Saving
Top Ranked
₹ 1,445 Cr
Fund Size
7.82%
3Y return

Tata India Tax Savings Fund (Growth)
Tax Saving
Top Ranked
₹ 2,342 Cr
Fund Size
5.7%
3Y return

HDFC TaxSaver fund (Growth)
Tax Saving
Top Ranked
₹ 7,263 Cr
Fund Size
-0.58%
3Y return
How to invest in best mutual funds?
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Create your account
Set-up your investment account
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Make instant payment or setup your investment for a later date
Track your investments
Mutual fund companies allot you units and send confirmation via email & SMS. The same gets updated in your Scripbox Account
What are Best Tax Saving Mutual Funds?
What are Best Tax Saving Mutual Funds?
Tax saving mutual funds are just like any other mutual fund with the only difference of bearing a tax benefit. An investment made towards a tax saving mutual fund is allowed as a deduction under section 80C of the Income Tax Act, 1961.
Majorly tax saving mutual funds are ELSS wherein the investment is equity-oriented and the lock-in period is 3 years.
How do Tax Saving Mutual Funds Work?
The process of investing in a mutual fund can be listed in just 4 steps
Step1 - Investors pool their investments with a fund manager
Step2 - The fund manager invests the pool of investment in various securities
Step3 - These securities generate returns for the investors
Step4 - The returns are paid back to the investors or invested back in the fund, as chosen by the investors
The securities selected for investment belong to different industries and sectors. This is done to ensure even if one industry generates low or no returns, other industries can balance the expected returns.
Industry | % of the total investment |
Automotive | 23% |
Banking | 24% |
Power | 17% |
FMCG | 19% |
Hospitality | 17% |
Tax saving mutual funds have a lock-in period of 3 years from the investment until the maturity of the funds. In case the investment is made through SIP, the lock-in period is calculated for every installment of investment.
Example
If SIP is made monthly from January 2020, then the installment of January 2020 will be matured in January 2023. For then the installment of February 2020 will be matured in February 2023
The redemption of investments is possible only for the unlocked units at the current NAV price for the units available for redemption at maturity. The investor needs to submit a withdrawal form to the fund manager and the amount will be credited to the account.
Features of Best Tax Saving Mutual Funds
Tax saving mutual funds or Equity Linked Savings Schemes are a better option of investments than other tax saving schemes. The features of ELSS are listed below.
The lock-in period for the investment made is 3 years
No limit on Maximum Investment. Minimum Investment Amount differs for fund houses. However mostly the minimum investment amount is Rs 500 only An entry load and exit load applies to ELSS schemes. These are fees charged by the fund managers on purchase/sale/redemption/transfer of the fund units by the investors. Deduction on investment is allowed under section 80C up to Rs 1.5 lakh
Tax saving mutual funds are Equity Linked Savings Schemes and open-ended in nature
Investment in ELSS funds exposed to market fluctuations and are risky. However, the risk level depends on the investor and his understanding of risk. Risk is a factor which is dependent on what is the limit of an individual given his spending, cost of living and income.
Benefits of Investing in the Tax Saving Mutual Funds
Investment in ELSS funds are ideal investment option for investors who wish to save tax and earn a higher return at the same time.
The key benefits of investing in ELSS are listed below:
Invest in equity while saving
ELSS allows an investor to benefit save money and enjoy the growth and returns associated with securities in the ELSS portfolio. While other saving schemes offer an average of 8% returns, ELSS provides better returns being a good portfolio with diverse and quality stocks.
Inspire saving habit
ELSS allows an investor to invest as low as Rs 500 per month, turning small savings into an investment developing habit of continuous savings.
Tax Benefit
One of the major reasons to invest in ELSS is the tax benefit it carries. The principal amount of investment is allowed as a deduction u/s 80C along with tax benefits of maturity amount and returns earned.
Other Benefits
ELSS allows an investor to invest monthly through SIPs and thus eliminating the need to invest a huge amount at once.
These investments are managed by professional fund managers, hence a layman having less knowledge about the market and its trends can invest freely.
A portfolio of various securities from different industries and sectors is made, hence minimizing the market risk of investing in the equity market
How to invest in Top Performing Mutual Fund?
An investor can invest a lump sum one time or through SIP periodically. An investor can choose to invest lump sum one time if he has considerable corpus to invest for a longer-term. While SIP is a regular investment over a period of time.
An investor can choose to invest monthly, quarterly, or half-yearly. SIP mutual funds are recommended for the first time mutual fund investors.
Investing through Scripbox is made easy and paperless. All you need to do is follow the below steps and start investing.
- Choose a plan to invest to start investing
- Set-up your investment account
- Make instant payment or setup your investment for a later date
- Money gets deducted from bank and gets transferred directly to mutual fund companies
- Mutual fund companies allot you units and send confirmation via email & SMS. The same gets updated in your Scripbox Account
Taxation on Best Tax Saving Mutual Funds in India
The principal amount invested in ELSS is allowed as a deduction under section 80C up to Rs 1.5 lakh of the Income Tax Act, 1961.
Long-Term Capital Gains (LTCG) tax is applicable on ELSS funds as the lock-in period is 3 years. LTCG @ 10% is levied on the capital gain earned over Rs 1 lakh
ELSS vs Other Tax Saving Investments
Other than ELSS , there are other tax saving investment options like fixed deposits, public provident fund, national pension scheme and others.
We have mentioned a comparison below to help understand advantages and disadvantages over ELSS vs other schemes
Particulars | ELSS | Public Provident Fund | National Pension Scheme | Fixed Deposits |
Rate of interest | 12% to 14% | 8.10% | 8% to 10% | 7% to 9% varies Bank to Bank |
Risk | Depends on market fluctuation | Low Risk | Low Risk | Low Risk |
Lock-in Period | 3 years | 5 years | Till Retirement | 5 years |
Tax Advantage on Investment | Principal amount deductible u/s 80C deduction up to Rs 1.5 lakh | Principal amount deductible u/s 80C deduction up to Rs 1.5 lakh | Principal amount deductible u/s 80C deduction up to Rs 1.5 lakh | Principal amount deductible u/s 80C deduction up to Rs 1.5 lakh |
Tax on Returns | 10% LTCG | Taxable | Partially Taxable | Taxable |
Best Tax Saving funds to invest
Frequently asked questions
Who should invest in ELSS tax saving mutual funds?
Among all investment schemes ELSS is suitable for an investor who has a tolerance for risk and a long-term financial goal to save taxes. An investor who wishes to invest a fixed or variable amount monthly can also choose to invest through SIP.
It is very convenient and easy nowadays to invest through SIP, you only need to link your saving account to the fund manager. Then provide an instruction to deduct investment amount every month from your saving account.
You can use Scripbox's SIP calculator to estimate the wealth created, maturity value of the SIP investments made.
Are ELSS tax saving mutual funds risky?
ELSS tax saving mutual funds are exposed to market fluctuations and are risky. However, the risk level depends on the investor and his understanding of risk. Risk is a factor which is dependent on what is the limit of an individual given his own spending, cost of living and income.
How much amount can one invest in ELSS tax saving mutual funds in the financial year?
There is no upper limit for investing in ELSS. But while considering tax saving schemes, an investment in ELSS tax saving mutual funds are allowed as a deduction up to Rs 1.5 lakh only
Can I withdraw the tax saving mutual funds?
Yes, withdrawal of tax saving mutual funds is allowed at the maturity of the funds. The units available for redemption can be redeemed. But a premature withdrawal of funds before 3 years of lock-in period is not allowed
Which mutual fund investment is tax-free in India?
Being tax saver schemes ELSS are the funds which provide a tax advantage. The investments made are allowed as a deduction up to Rs 1.5 lakh and the capital gains up to Rs 1 lakh are tax-free.
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