Tax Saver Mutual Funds/ELSS: Along with saving and investing, intelligent tax planning is also necessary, especially for the salaried class. It is better to invest in such schemes, where one can get tax benefits along with the scope of higher returns.
There are many such schemes in the market to save tax. There are some schemes, where returns are guaranteed, but this return will be in single digits only. At the same time, there are some schemes, where there is some risk as compared to the schemes with guaranteed returns, but the returns can be double or even triple. Among these, Equity Linked Savings Scheme (ELSS) of mutual funds is an option. This can help in creating a bigger corpus for the investors in the long term. Let us have a look at some of the top performing income tax saver funds.
SBI Long Term Equity Fund
20 Year SIP Return: 17.16 percent
Value of 1 Lakh Investment in 20 Years: 43.23 Lakh
6000 Monthly SIP Value in 20 Years: 1.03 Crore
Minimum Investment: Rs 500
Minimum SIP: Rs 500
Total Assets: 9878 Crore (As on 30th June, 2022)
Expense Ratio: 1.77% (up to 31st May, 2022)
ICICI Pru LT Equity Fund
20 Year SIP Return: 17%
Value of 1 Lakh Investment in 20 Years: 40.89 Lakh
6000 Monthly SIP Value in 20 Years: 1.02 Crore
Minimum Investment: Rs 500
Minimum SIP: Rs 500
Total Assets: 9072 Crore (As on 30th June, 2022)
Expense Ratio: 1.91% (up to 31st May, 2022)
HDFC Taxsaver Fund
20 Year SIP Return: 16 percent
Value of 1 Lakh Investment in 20 Years: 37.24 Lakh
6000 Monthly SIP Value in 20 Years: 87.50 Lakh
Minimum Investment: Rs 500
Minimum SIP: Rs 500
Total Assets: 8716 Crore (As on 30th June, 2022)
Expense Ratio: 1.83% (up to 31st May, 2022)
Tata India Tax Savings Fund
20 Year SIP Return: 15.6%
Value of 1 Lakh Investment in 20 Years: 29.18 Lakh
6000 Monthly SIP Value in 20 Years: 85.20 Lakh
Minimum Investment: Rs 500
Minimum SIP: Rs 500
Total Assets: 2743 Crore (up to 30th June, 2022)
Expense Ratio: 1.78% (as of 31st May, 2022)
Benefits of investing in ELSS
AK Nigam, director, BPN Fincap, says that most of the schemes in this category have a lock-in period of 3 years, while the returns are high compared to other tax saving schemes. At least 80 per cent of ELSS exposure is in equities. Because of this, the scope for higher returns increases. This has made it a popular tax saving option. Looking at the returns of ELSS, investors have got 12 to 18 percent returns in many schemes in 5 years. The good thing is that even after the completion of the lock-in period, you can continue investing as long as you want. That is, it also promotes long-term investment, through which financial stability can be found in the future.
One can also opt for Systematic Investment Plan (SIP) in ELSS. The profit on investment in ELSS and the amount received from redemption is completely tax free. Long Term Capital Gains (LTCG) on returns up to Rs 1 lakh in 1 year through ELSS are exempted from income tax. However, profit above this limit is taxed at the rate of 10 percent.
(Disclaimer: The information given here is based on mutual fund performance and expert interaction. Investments in the market are subject to risk. Hence, consult your advisor before investing.)
