Best Tax Saving Mutual Funds - Consider the best performing tax saving mutual funds to invest in 2025 with Scripbox.com. Find the list of best tax saving mutual funds in India on the basis of Returns, Latest Nav, Ratings, Performance etc
Below are the Best Tax Saving Mutual Funds in india:
1 . DSP ELSS Tax Saver Fund Direct (G)
DSP ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 15.7% , a 3 Years return of 21.8% and a 5 Years return of 28.3%
. The fund has an expense ratio of 0.7% and an AUM of ₹
16218 crores as of 2025-05-12.
It was Launched on 2013-01-01. The minimum lump sum investment is ₹500.
2 . SBI Long Term Equity Fund Direct (G)
SBI Long Term Equity Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 9.2% , a 3 Years return of 26.1% and a 5 Years return of 29.9%
. The fund has an expense ratio of 1.1% and an AUM of ₹
28506 crores as of 2025-05-12.
The minimum lump sum investment is ₹500.
3 . HDFC ELSS Tax Saver Fund Direct (G)
HDFC ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 14.2% , a 3 Years return of 24.3% and a 5 Years return of 29.3%
. The fund has an expense ratio of 1.1% and an AUM of ₹
16232 crores as of 2025-05-12.
It was Launched on 2013-01-01. The minimum lump sum investment is ₹500.
4 . Motilal Oswal ELSS Tax Saver Fund Direct (G)
Motilal Oswal ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 7.7% , a 3 Years return of 25.9% and a 5 Years return of 28.1%
. The fund has an expense ratio of 0.7% and an AUM of ₹
3897 crores as of 2025-05-12.
It was Launched on 2015-01-21. The minimum lump sum investment is ₹500.
5 . Franklin India ELSS Tax Saver Fund Direct (G)
Franklin India ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 11.0% , a 3 Years return of 21.8% and a 5 Years return of 28.9%
. The fund has an expense ratio of 1.1% and an AUM of ₹
6592 crores as of 2025-05-12.
It was Launched on 2013-01-01. The minimum lump sum investment is ₹500.
6 . Bandhan ELSS Tax Saver Fund Direct (G)
Bandhan ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 5.3% , a 3 Years return of 17.2% and a 5 Years return of 29.4%
. The fund has an expense ratio of 0.7% and an AUM of ₹
6806 crores as of 2025-05-12.
The minimum lump sum investment is ₹500.
7 . Kotak ELSS Tax Saver Fund Direct (G)
Kotak ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 5.3% , a 3 Years return of 18.7% and a 5 Years return of 25.7%
. The fund has an expense ratio of 0.7% and an AUM of ₹
6077 crores as of 2025-05-12.
The minimum lump sum investment is ₹500.
8 . Bank of India ELSS Tax Saver Fund Direct (G)
Bank of India ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of -2.2% , a 3 Years return of 19.4% and a 5 Years return of 26.1%
. The fund has an expense ratio of 1.0% and an AUM of ₹
1324 crores as of 2025-05-12.
The minimum lump sum investment is ₹500.
9 . Nippon India ELSS Tax Saver Fund Direct (G)
Nippon India ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 7.5% , a 3 Years return of 19.1% and a 5 Years return of 26.9%
. The fund has an expense ratio of 1.1% and an AUM of ₹
14782 crores as of 2025-05-12.
The minimum lump sum investment is ₹500.
10 . Parag Parikh ELSS Tax Saver Fund Direct (G)
Parag Parikh ELSS Tax Saver Fund Direct (G)
is a Equity fund
that has delivered a 1 Year return of 14.1% , a 3 Years return of 20.1% and a 5 Years return of 29.0%
. The fund has an expense ratio of 0.6% and an AUM of ₹
5085 crores as of 2025-05-12.
It was Launched on 2019-07-24. The minimum lump sum investment is ₹500.
A tax-saving mutual fund provides the benefits of investing in equity securities along with a tax deduction. Investors seeking a long term investment coupled with benefits equity and tax saving must consider this fund. Now the question arises which is the best tax saving mutual fund and how to select it. Firstly, ensure that the fund meets your investment goals. Secondly, consider its NAV, risk, historical returns, fund manager’s portfolio while investing.
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
Step 1 – Investors pool their investments with a fund manager
Step 2 – The fund manager invests the pool of investment in various securities
Step 3 – These securities generate returns for the investors
Step 4 – 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 mutual 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
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%
7.10% p.a.
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
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.
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.
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 does Scripbox rate funds?
Proprietary system to rate mutual funds
We use a proprietary system to rate mutual funds and based on the outcome of the rating, we classify funds into 4 categories namely "Recommended", "Top Ranked", "Neutral" and "Not Recommended".
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.
Top Ranked
These funds are the top performers within a category of mutual funds considering a combination of criteria. The best amongst these funds are also labelled as Scripbox Recommended.
Neutral
Scripbox recommends other funds, which are more suitable for your investment objectives, within this asset and sub asset class.
Not Recommended
Scripbox algorithm classifies funds as "not recommended" when they perform poorly on a combination of criteria. These funds are usually the poorest performers within a category.
Things we consider to provide ratings for a mutual fund.
Outperformance Consistency
We look at the consistency of the outperformance that the fund has displayed. A fund with high consistency is preferred
Rolling Returns (1 Year Holding Period)
We consider average 1 year return that the fund has delivered over an extended period of time
Rolling Returns (3 Year Holding Period)
We consider average 3 year return that the fund has delivered over an extended period of time
Volatility of Outperformance
We consider how volatile the out-performance over the benchmark has been. A lower volatility is preferred
Downside Protection Measure
We look at how resilient the fund is to market down trends. A fund that has shown a higher resilience is preferred
Upside Participation Measure
We consider how well the fund has been able to participate in upmoves in the market. A fund that participates well is preferred
Fund Size
We look at the size of the fund with respect to other funds in the category. Larger funds are preferred.
How to invest in best mutual funds?
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Invest via netbanking, UPI or through an SIP (eNACH mandate).
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