Elss Mutual Funds

ELSS Mutual Funds


What is ELSS Mutual Fund?

The Equity Link Saving Scheme (ELSS) Mutual Fund is an open-ended equity fund that primarily invests in equity and equity-related products.They are also called as tax saving mutual funds.

Its salient features are-

  • Open-ended mutual fund with at least 80% of assets invested in stocks
  • It provides tax benefits under section 80C of the income tax act
  • Has a 3-year lock-in period

ELSS Mutual Funds competes with other tax-saving measures such as PPF, NPS, Tax saving fixed deposit and National savings certificate; but the distinction point being while ELSS is a wealth creator all other are fixed income products.


ELSS Mutual Funds Tax Benefit

Upto 1.5 lakh in taxes can be saved per year on investments in ELSS as per Section 80C. This 1.5 lakh per year is an aggregate number containing PPF, National Savings Certificate, life insurance etc.

Since ELSS Mutual Funds have a 3 year lock-in period, Long term Capital Gains (LTCG) 10% will be taxed on gains exceeding 1 lakh. The taxes on ELSS lie somewhere between fixed deposits which are taxed as per income tax slab and PPF which offers tax free interest rates. 비트코인 배팅


ELSS Mutual Fund Lock in period

ELSS has a mandated 3-year lock-in period; both for lumpsum investments as well as through SIP.


For lumpsum, a unit purchased on 1st January 2019 can only be redeemed after 1st January 2022.

In SIP, units purchased on 1st January 2019 can be redeemed on 1st January 2022, units from 1st February 2019 on 1st February 2022 and so on.

Investment OptionsLock-in Period
ELSS3 years
Tax saving fixed deposits5 years
NSC5 years
PPF15 years
NPSAt retirement

Though amount cannot be removed before 3 years, ELSS investment receipts can be used to obtain a loan of up to 50-60% of the ELSS investment amount on 9-10% interest rates.ss

Also there is no cap in amount invested in ELSS.


Advantages of ELSS

  • Investment as well as tax savings
  • Brief lock-in period
  • The amount though invested for a period of 3 years is much less than other tax saving measures.
  • ELSS Mutual Funds invest predominantly in the stock market and their returns have handsomely beaten indexes over long-term periods.


Important note

ELSS only has actively managed funds and with no restriction other than the 80% cap on stocks, funds differ based on

  • Investing Style (growth, value or blended)
  • Proportion of equity and debt
  • Level of diversification and concentration
  • Market Capitalization

In conclusion, anyone interested in an investment avenue that could provide reasonable returns in the long-term as well as tax-saving benefits can invest in ELSS funds.


Can NRI Invest in ELSS Mutual Funds?

Yes, NRIs can invest in ELSS. If they have taxable income in India then NRIs should invest in ELSS and take advantage of 1.5 lakhs deduction available u/s 80C. Many NRIs have income from house property in India. They can invest in ELSS funds to lower their tax burden.


Best ELSS Mutual Fund

Best ELSS Mutual Fund

Fund NameLaunchNet Assets (Cr)No of Stocks in the PortfolioTop 10 Stocks %1 Yr Ret (%)3 Yr Ret (%)5 Yr Ret (%)10 Yr Ret (%)15 Yr Ret (%)Standard DeviationSharpe RatioFund Manager
Quant Tax Plan01-Apr-006584359.0255.2135.9125.4419.9511.2823.951.21Ankit A Pande
BOI AXA Tax Advantage Fund25-Feb-095526532.7235.328.7821.5217.84--20.091.18Aakash Manghani
Mirae Asset Tax Saver Fund28-Dec-1510,6606345.9429.4823.9621.35----21.960.91Neelesh Surana
Canara Robeco Equity Tax Saver Fund31-Mar-933,0985744.6629.3523.920.2817.2215.4619.931.01Vishal Mishra, Shridatta Bhandwaldar
IDFC Tax Advantage (ELSS) Fund26-Dec-083,5334742.6942.9423.2719.4118.94--26.140.76Daylynn Gerard Paul Pinto
JM Tax Gain Fund31-Mar-08663541.1529.4322.4818.8317.37--22.60.83Sanjay Kumar Chhabaria, Chaitanya Choksi
DSP Tax Saver Fund18-Jan-079,6365445.2131.9222.2216.9918.84--22.270.82Rohit Singhania, Charanjit Singh
Union Long Term Equity Fund23-Dec-114645844.6731.3622.1516.4715.12--20.70.9Sanjay Bembalkar, Vinay Paharia
UTI Long Term Equity Fund15-Dec-993,0386740.0528.7421.3416.6615.4810.8221.10.84Vishal Chopda
PGIM India ELSS Tax Saver Fund11-Dec-153423648.8135.1321.1617.67----21.30.82Utkarsh Katkoria , Srinivas Rao Ravuri , Puneet Pal

*Based on last 3 year returns




3 Year Returns


*Data as on 21st January 2022

Also, have a look at Best Small Cap Mutual Funds & AMC Profiles,  If you need any assistance on How To Invest In Mutual Funds Feel free to contact Wealth Baba – Financial Planner & Investment Advisor in India. We will try to help you out in the best possible way.

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