The most effective mutual funds for reducing one’s tax liability are known as equity-linked savings schemes or ELSS for short. The category of diversified equity mutual funds includes tax-advantaged savings accounts, sometimes known as ELSS mutual funds. The equity fund puts at least 80% of all its assets in equities and equity-related instruments; in addition, a portion of the corpus is invested in debt investments. The growth of an investor’s capital while simultaneously reducing their taxable income is the twin benefit offered by Top ELSS funds. ELSS mutual funds have a three-year minimum investment requirement before withdrawals can be made.
Features of Top ELSS Funds
Here are the top features of ELSS Funds which will help you decide your investment.
- With ELSS you get approx- 1.5lakh/year as tax deduction under Section 80C.
- The lock-in period for ELSS mutual funds is 3 years, besides there is no early withdrawal accessibility.
- There is no maximum limit to the amount of investment in ELSS funds However, the minimum amount that can be invested varies significantly between different fund companies.
- These are the sole tax-deferred assets in investment that can generate returns higher than the rate of inflation.
- Canara Robeco Equity Tax Saver Fund
The fund not only has a rating of 5 stars, but it also has an AUM of 1,359 Cr, which is significantly more than the Bank of India Tax Advantage Fund’s AUM. With such a return of 33.69% over the course of one year as well as 21.05% over the course of five years, the fund has achieved the highest long-term return compared to the other options in the group.
- Kotak Tax Saver Fund
A mutual fund that has regularly surpassed its respective benchmark throughout a medium to long time period is considered to have achieved outperformance.
The Fund has a strong score in concentration and is among the highest scorers in the ELSS category for the metric of stability of delivering alpha over the course of the previous five years. Also, it has consistently been among the highest scorers in the absolutely crucial criteria of volatility, which has resulted in the fund being ranked as one of the top ELSS Funds according to ZFunds Ratings.
For investors looking to make a long-term commitment, the Kotak Taxsaver Fund is an excellent choice for a tax savings fund.
- BOI AXA Tax Advantage Fund
The objective of the Scheme is to achieve long-term capital growth through the management of a balanced portfolio that is predominantly composed of equities and equity-related instruments and invests in markets of all sizes. The Scheme can be thought of as a diversified multi-cap investment vehicle. The Scheme does not provide any certain or guaranteed returns for participants. On February 25, 2009, the BOI AXA Tax Advantage Fund, which is an Equity – ELSS fund, was introduced to the investing public.
Conclusion
When compared to the returns offered by the PPF, which are predetermined by the Indian government and currently stand at 7.9%, the top ELSS funds offer a superior rate of return; traditionally, these funds have offered returns of up to 15%. As a result of all of this, we are able to draw the conclusion that top ELSS funds provide investors with a superior opportunity to reduce their taxable income through investment. You must consider investing in these top ELSS funds if you are planning to plan a stable financial environment for your future.