ELSS Tax Saving Funds
Compare ELSS (Equity Linked Savings Scheme) mutual funds that help you save tax under Section 80C while investing in equities. ELSS funds have the shortest lock-in period among all 80C options at just 3 years, and they offer the potential for higher returns compared to PPF or tax-saving fixed deposits. Browse NAV, returns, expense ratios, and fund ratings below.
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Tax Saving under Section 80C
ELSS funds have a 3-year lock-in period — the shortest among 80C investments. Invest up to Rs 1.5 lakh per year for tax deduction.
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Frequently Asked Questions
What is ELSS and how does it save tax?
ELSS (Equity Linked Savings Scheme) is a type of mutual fund that qualifies for tax deduction under Section 80C of the Income Tax Act. You can claim deductions up to Rs 1.5 lakh per financial year on your ELSS investments, reducing your taxable income. ELSS funds have a mandatory 3-year lock-in period — the shortest among all Section 80C options. They invest primarily in equities, giving you both tax savings and the potential for market-linked returns.
Is ELSS better than PPF or fixed deposits for tax saving?
ELSS offers the shortest lock-in (3 years vs 15 years for PPF and 5 years for tax-saving FDs) and the highest return potential since it invests in equities. However, returns are not guaranteed and your investment can lose value in bear markets. PPF offers guaranteed returns and full capital safety. Tax-saving FDs offer fixed returns but are fully taxable. ELSS is best for investors with a moderate-to-high risk appetite who can handle short-term volatility for potentially higher long-term returns.
Frequently Asked Questions
What is NAV in a mutual fund?
NAV, or Net Asset Value, is the per-unit price of a mutual fund scheme. It is calculated as the total value of the fund's assets minus its liabilities, divided by the number of outstanding units. Fund houses declare NAV at the end of each business day based on closing prices, and AMFI publishes it. When you invest, you are allotted units at the applicable NAV.
How do I start a SIP in mutual funds in India?
To start a SIP you first complete your KYC, which is mandatory under SEBI rules. You then choose a scheme, decide a monthly amount — often as low as Rs 500 — and set an auto-debit mandate from your bank. On your chosen date each month, units are bought at the prevailing NAV. You can invest directly through an AMC or via a distributor platform.
What is the expense ratio and why does it matter?
The expense ratio is the annual fee a fund charges to manage your money, expressed as a percentage of assets. It covers fund management, administration and distribution costs, and is deducted from the NAV. SEBI caps expense ratios by fund size and type. A lower ratio means more of the return stays with you, which is why direct plans, with no distributor commission, cost less than regular plans.
Are ELSS mutual funds good for tax saving?
ELSS (Equity Linked Savings Scheme) funds qualify for deduction under Section 80C of the Income Tax Act, up to Rs 1.5 lakh a year in the old tax regime. They carry the shortest lock-in among 80C options at just three years and invest mainly in equities, offering growth potential. Returns are market-linked, and gains above Rs 1.25 lakh a year are taxed as long-term capital gains.