Top ELSS tax saving : A Complete Guide

ELSS tax saving – If you are looking for the most effective way to save taxes under Section 80C while also growing your wealth, then ELSS (Equity Linked Savings Schemes) should be at the top of your list. ELSS continues to stand out as one of the most popular tax-saving investment options for new and experienced investors alike.
Unlike traditional 80C options like PPF, NSC, or life insurance, ELSS offers the perfect combination of tax savings + high return potential + shortest lock-in period of just 3 years.

This detailed guide covers everything you need to know about Top ELSS Funds to Save Tax, including:

What is ELSS & how it helps in tax saving
Benefits of ELSS tax saving over other 80C options
How to choose the best ELSS fund
Top ELSS funds with performance data
Who should invest in ELSS
Common mistakes to avoid
Final expert recommendations

Let’s begin.

What is ELSS? A Quick Introduction

ELSS (Equity Linked Savings Scheme) is a type of equity mutual fund that allows investors to save taxes under Section 80C, with a maximum deduction limit of ₹1,50,000 per financial year.

Key features of ELSS

Minimum lock-in: 3 years (shortest among all 80C options)
High return potential (because it invests in equity)
Can invest through SIP or lump sum
Eligible for tax deduction under Section 80C
No upper limit, but tax deduction capped at ₹1.5 lakh

With the rising awareness of mutual funds and the need for long-term financial planning, ELSS has become the preferred option for young professionals, salaried individuals, and long-term wealth creators.

Why Choose ELSS for Tax Saving?

There are several reasons why ELSS tax saving investments are becoming more popular each year.

Shortest Lock-in Compared to Other Tax-Saving Instruments

Investment	Lock-in Period
ELSS	3 years
PPF	15 years
NSC	5 years
Tax-saving FD	5 years
ULIP	5 years

ELSS offers the fastest liquidity while still providing tax benefits.

Higher Returns Over the Long Term

ELSS invests primarily in equities, which historically deliver better long-term returns compared to fixed-income products.

Average ELSS returns over the past decade: 12–16% annually
PPF interest rate: 7.1% (approx.)
FD rate: 6–7%

Dual Benefits: Tax Saving + Wealth Creation

Most tax-saving investments give either tax benefit or stable returns.
ELSS offers both.

Flexibility of SIP Investment

You can start an SIP in ELSS for as low as ₹500 per month, making it suitable even for first-time investors or students starting early.

Better Post-tax Returns

Long-term capital gains up to ₹1 lakh per year are tax-free.
Beyond that, LTCG tax applies at 10%, which is still low compared to other instruments.

How to Choose the Best ELSS Fund

Before we explore the Top ELSS Funds to Save Tax, here are the factors you must check:

Long-term Performance (5-year & 10-year returns)

ELSS is a long-term product, so past returns over 5–10 years matter more than short-term trends.

Fund Manager Expertise

A stable and experienced fund manager ensures consistency in performance.

Portfolio Quality

A good ELSS fund invests in a diversified mix of:

Large-cap stocks
Mid-cap stocks
Select small-cap opportunities

Expense Ratio

Lower expense ratio = higher long-term returns.

Risk Level

ELSS funds involve equity risk. Choose a fund based on your risk tolerance:

Conservative: Large-cap oriented
Moderate: Multi-cap approach
Aggressive: Mid-cap heavy exposure

Performance Comparison of Top ELSS Funds

ELSS Fund	5-Year Return (Approx.)	Risk Level	Best For
Quant ELSS Tax Saver	25–30%	High	Aggressive investors
Mirae Asset Tax Saver	18–20%	Moderate	Balanced investors
Axis Long Term Equity	12–14%	Low–Moderate	Conservative investors
Parag Parikh ELSS	17–19%	Moderate	Value-focused investors
SBI Long Term Equity	15–18%	Moderate	Long-term stable growth
Kotak Tax Saver	15–17%	Moderate	Diversification seekers
Canara Robeco Equity Tax Saver	16–18%	Low–Moderate	Low volatility preference

How to Start Investing in ELSS Tax Saving Funds

Investing in ELSS is extremely easy and beginner-friendly.

Step-by-step guide

Complete your KYC using Aadhaar + PAN
Select a reliable mutual fund platform or AMC website
Choose your preferred ELSS tax saving fund
Decide investment mode: SIP or Lump Sum
Start with as low as ₹500 per month
Track performance annually (not monthly)

SIP vs Lump Sum in ELSS: What Should You Choose?

SIP (Systematic Investment Plan)

Good for salaried individuals
Reduces market risk
Builds wealth through rupee-cost averaging
Best for long-term tax planning

Lump Sum

Useful when making last-minute investments for tax saving
Suitable for experienced investors who can time the market

Pro Tip:
For most people, SIP in ELSS is the best way to maximize the benefits.

Tax Benefits of ELSS

Investments in ELSS qualify for deduction under Section 80C, allowing you to reduce your taxable income by up to ₹1,50,000.

Example:

If your annual income = ₹10,00,000
ELSS investment = ₹1,50,000
Taxable income becomes = ₹8,50,000

This can save up to ₹46,800 in taxes (based on current tax slabs).

Who Should Invest in ELSS Funds?

ELSS is ideal for:

Salaried individuals looking for tax saving + high returns
First-time equity investors
Young professionals starting wealth creation
Long-term investors
Anyone who can stay invested for 3–5 years or more

Common Mistakes People Make While Investing in ELSS

Choosing an ELSS fund only for tax saving

Always check long-term performance, not just the tax benefit.

Redeeming immediately after 3 years

ELSS works best when held for 7–10 years.

Starting SIPs too late (February–March rush)

Start early in April to enjoy stress-free investing.

Investing in multiple ELSS funds

1 or 2 well-chosen funds are enough.

FAQs About ELSS Tax Saving Funds

Is ELSS better than PPF for tax saving?

Yes, if you want higher returns and are comfortable with risk.

Can I withdraw money before 3 years?

No. ELSS has a strict lock-in of 3 years.

Is ELSS good for long-term wealth creation?

Absolutely. ELSS is basically an equity fund with tax benefits.

Can I invest more than ₹1.5 lakh in ELSS?

Yes, but tax exemption is limited to ₹1.5 lakh under Section 80C.

Final Thoughts: Best ELSS Funds to Save Tax

To summarize, here are the top recommendations for different investor types:

Best Overall Performer (High Growth)

⭐ Quant ELSS Tax Saver Fund

Best Balanced Fund

⭐ Mirae Asset Tax Saver Fund

Best Low-Risk Option

⭐ Axis Long Term Equity Fund

Best Value Strategy

⭐ Parag Parikh ELSS Tax Saver Fund

Investing in ELSS not only helps in tax saving but also sets the foundation for long-term financial freedom. With rising inflation and growing financial awareness, ELSS remains one of the smartest choices for anyone wanting to save tax while building wealth. ELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax savingELSS tax

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