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Best Tax Saving Schemes: 7 Top Equity Linked Savings Schemes (ELSSs) Have Given Returns Above 30%
An equity linked saving scheme (ELSS) is popularly called a tax saving fund because it is tax efficient. 7 schemes have performed well in last 3 years to give returns above 30%.
ELSS is an equity mutual fund that allows investors to invest in a diversified pool of stocks along with eligibility of tax deduction under Section 80C of the Income Tax Act.
Investments made in an ELSS will allow an individual or HUF a deduction from total income of up to Rs 1.5 lakhs per annum. Among plethora of various tax saving investment options available, ELSS has a lowest mandatory lock-in period of 3-years. Post the lock-in period investors can switch or redeem the units freely.
ELSS offers both growth and dividend options. Investors investing in an ELSS through a systematic investment plan has to keep in mind that every SIP would be locked for a term of 3-years. Plus investments up to Rs 1.5 lakhs, made in a financial year will be eligible for tax deduction.
The portfolio of an ELSS is a market cap and sector agnostic, i.e. the fund can invest freely in stocks of any market cap and sectors without any limitations. So largely the portfolio is heavy with equity investments, making it the most high-risk-high-return investment proposition.
Thus, before investing in any equity linked saving scheme ensure that you are choosing it well. On investing the funds get locked-in for three years, and if you choose a poorly performing scheme you would lose more.
So this equity mutual category is suitable for investors who want to invest for longer term and want to avail tax benefit as well, provided they are willing to bear short term volatility.
In last 3 years 7 equity schemes have given returns above 30% and higher than the category return. These 7 schemes have even beaten the benchmark, S&P BSE 500 TRI in same period.
Given below are the details...
| Scheme Name | 6-months | 1-year | 3-year | 5-year | 7-year |
| Quant Tax Plan | -10.74% | 4.11% | 50.54% | 22.34% | 22.27% |
| Bandhana Tax Advantage (ELSS) Fund | -1.61% | 2.63% | 37.19% | 13.16% | 16.76% |
| Parag Parikh Tax saver Fund | 0.09% | 8.05% | 32.93% | - | - |
| PGIM India ELSS Tax Saver Fund | 0.04% | 2.49% | 31.88% | 13.80% | 15.24% |
| HDFC Tax Saver Fund | 0.04% | 9.97% | 30.94% | 10.27% | 13.12% |
| Mirae Asset Tax Saver Fund | -2.73% | 0.14% | 30.38% | 15.48% | 19.14% |
| SBI Long Term Equity Fund | 0.53% | 8.17% | 30.16% | 11.85% | 12.72% |
| Categrory Average | -3.57% | 1.52% | 26.88% | 11.53% | 13.99% |
| Benchmark | -5.50% | -0.35% | 28.06% | 11.66% | 13.83% |
Parag Parikh Tax Saver Fund hasnt completed 5 years yet, so the returns are not available. Bandhan Tax Advantage (ELSS) Fund is among the top performing scheme to give high returns after Quant Tax Plan across various time periods. In last 6 months 3 schemes have given neagtive returns besides the benchmark and in one year, only the benchmark has given the negative return.
All the funds considered are growth direct plans, the returns are taken from ValueResearch.
Disclaimer
Mutual fund investments are subject to market risk. The above-mentioned information is purely informational and doesn't guarantee any return. Greynium Information Technologies and the Author are not liable for any losses caused as a result of a decision based on the article.
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