Top 10 Tax Saving Mutual Funds in India

Tax saving mutual funds like ELSS are similar to any other mutual fund scheme with the added advantage of saving tax. ELSS is covered under Section 80 C of the Income Tax Act, of 1961. You can save up to 1.5 Lakhs in a year in taxes by investing in ELSS (Equity Linked Saving Scheme). ELSS has a 3-year lock-in period, offering the potential for high returns and tax savings, making it a popular choice for long-term investors. ELSS has higher returns potential, but also higher risk and volatility.

Tax Saving Mutual Funds

List of Tax Saving Mutual Funds in India

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Table of Contents

Name of FundsCategory And Risk3-year returnsRatingExpense RatioAUM (Asset under management)
Quant ELSS Tax Saver Fund.Equity And High Risk28.74% (Minimum SIP Investment 500)5 star0.77% (Inclusive of GST)Rs. 9,860.39 Cr.
SBI Long Term Equity Fund.Equity And High Risk28.34%(Minimum SIP Investment 500)5 star0.94% (Inclusive of GST)Rs. 23,887.64 Cr
Bank of India ELSS Tax Saver Fund.Equity And A bit of a mixed picture on risk.25.41%(Minimum SIP Investment 500)4 star0.98% (Inclusive of GST)Rs. 1,326.57 Cr.
Motilal Oswal ELSS Tax Saver Fund.Equity And High Risk26.86%4 Star0.68% (Inclusive of GST)Rs. 3,435.94 Cr.
JM ELSS Tax Saver Fund.Equity And High Risk25.31%4 Star1.13% (Inclusive of GST)Rs. 146.14 Cr.
HDFC ELSS Tax Saver Fund.Equity And High Risk27.31%4 Star1.13% (Inclusive of GST)Rs. 14,752.93 Cr.
Bandhan ELSS Tax Saver Fund.Equity And High Risk21.71%5 Star0.64% (Inclusive of GST)Rs. 6,433.56 Cr.
DSP ELSS Tax Saver Fund.Equity And High Risk22.02%4 Star0.75% (Inclusive of GST)Rs. 15,161.2 Cr.
Mahindra Manulife ELSS Fund.Equity And High Risk20.10%4 Star0.6% (Inclusive of GST)Rs. 866.79 Cr.
Kotak ELSS Tax Saver Fund.Equity And High Risk22.67%5 Star0.58% (Inclusive of GST)Rs. 5,768.54 Cr.

Points to Remember Before Investing in Tax-Saving Mutual Funds

  1. Fund Management: The fund manager of an ELSS fund allocates at least 80% of the fund’s assets in equity and equity-related instruments. Consider the fund house’s reputation and the experience of the fund manager.
  2. Don’t rely on Rating/ Go Beyond Rating: Don’t go with the company’s rating. Before investing, do your research to gain sufficient knowledge related to the fund. 
  3. Lock-in-Period: A lock-in period signifies a pre-established duration where investors cannot withdraw their investments without incurring penalties. Once the lock-in period ends, investors gain the freedom to make withdrawals or exit their investments without penalties or restrictions.
  4. Risk Tolerance: Knowing the risk tolerance level helps investors plan their entire portfolio and will drive how they invest. Risk tolerance must be balanced effectively so that you can take advantage of long-term opportunities and understand how to navigate market fluctuations.
  5. ELSS Category: ELSS, or Equity Linked Saving Schemes, are mutual funds that invest in equities and allocate some funds to the debt market.ELSS is risky but has high returns. There is tax saving on existing ELSS schemes after 3 years.

Advantages of Tax Saving Mutual funds

  1. ELSS is a type of Mutual Fund that allows you to claim for income tax deduction. You can save up to ₹ 1.5 lakhs a year in taxes by investing in ELSS.
  2. t has the potential for high returns over the long term.
  3. Reduced risk, and provided diversification in various companies within the Indian stock market.
  4. For your investment experienced manager make investment decisions that save your time and research efforts.
  5. You can track your investment, and provide statement details about your investment performance.
  6. ELSS mutual funds are a great investment option for those who are looking for wealth generation, getting regular returns, and saving taxes at the same time. 
  7. Tax-saving investments help in reaching your financial goals while lowering your tax payments. 
  8. ELSS funds have historically performed well in the long term. Hence, investors are advised to stay invested for longer tenures to unleash the potential of these funds with the help of the power of compounding. 
  9. Compared to traditional tax saving instruments, ELSS funds primarily invest in equities which show the potential to generate high returns.
  10. ELSS is an excellent investment for those in the higher income tax brackets. ELSS funds promote disciplined saving and wealth creation by encouraging long-term investment.

Risk in Tax Saving Mutual Funds

  1. All ELSS mutual funds are affected by market risk, volatility risk and concentration risk.
  2. The return is high but the risk is higher because ELSS funds are directly linked to the equity market. The fund performance is dependent on the skill and experience of the fund manager.
  3. No guarantee of returns and a lock-in period of 3 years. You cannot withdraw money before the lock-in period. Your money is locked for three years from the date of your investment.
  4. It is suitable for long-term investment if you want returns quickly, you should not invest in ELSS funds. The value of the investment may go up or down significantly depending on market conditions.
  5. ELSS funds do not offer guaranteed returns as they are high-risk-return investments. ELSS funds invest in stocks that are subject to market fluctuations.


Tax saving mutual funds or ELSS offer a combination of tax benefits and growth potential, but they also come with inherent risks. ELSS is covered under Section 80 C of the Income Tax Act, of 1961. You can save up to 1.5 Lakhs in a year in taxes by investing in ELSS. ELSS funds provide flexibility and liquidity.


  1. Who can invest in ELSS?

Ans: People who want returns quickly should not invest in ELSS funds. ELSS funds may be suitable only if you have a longer investment desire.

  1. Can I withdraw my investment before the lock-in-period?

Ans: There is no explicit penalty for withdrawing from an ELSS before the three-year lock-in period is completed. This means you cannot redeem your ELSS units before this period elapses.

  1. Where can I invest in an ELSS fund? Can I invest in ELSS through SIP?

Ans: Investment in ELSS through online platforms, Mutual fund companies, and banks.

Yes, you can invest in ELSS through SIP.

  1. How much can I invest in ELSS?

Ans: The contributions begin from Rs. 500 for a month. There is no maximum limit for the investment.

  1. What is the lock-in period for ELSS funds?

Ans: Investments made in an ELSS fund are locked in for a period of three years. You cannot redeem or withdraw your investment for a minimum of 3 years from the date of investment. There are no provisions to pay the penalty and redeem your units within the lock-in period.

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