Top 12 ELSS Mutual Funds to save taxes
By Advocate Kohal Dev Sharma, Punjab and Haryana High Court
Every year, as soon as the season of tax filing arrives, taxpayers start looking for ideas to save taxes by different ways of investing. Tax saving methods are many, but it is really important to choose a method that not only saves your money but also makes you more of it in the future. Although, the deadline for tax is nowhere near right now, but this is the best time to plan on tax saving investments as one can choose from a number of choices. It is definitely a great time to act and decide which tax-deductible expenses can be cut down in order to help you lower the amount of taxes that you have to pay to the government.
Not only is the idea of saving taxes quite attractive but is also part of a systematic planning that can help earn more money. Most of the people plan on investing in tax saving investment schemes only when the deadline is nearby and do not plan all around the year. It is one of the biggest mistake that they can make. This is why they end up making investments in schemes and products that are not only unsuitable for them but are also unsupportive of their future financial goals. Having a vision of just saving tax can only help save tax and not help in growing one’s wealth in the future, thus hampering their future financial goals in the longer run.
What are the options?
Well, there are a lot of options out there. Usually, we ignore the investment planning part all around the year and only act when the deadline arrives. Taxpayers should look into Section 80C, which is one of the most commonly used sections for saving on taxes and covers schemes such as ELSS, Public Provident Fund (PPF), five-year tax-saving bank deposits, Senior Citizens’ Savings Scheme (SCSS), five-year post office time deposits, National Savings Certificate (NSC), Sukanya Samriddhi Account, and Employees’ Provident Fund (EPF) etc.
Why is ELSS a greater option amongst all of the tax saving schemes?
If you have always wished of investing in stocks but didn’t have the courage or knowledge to do so then ELSS funds are the right choice for you. They diversify equity allocation amongst all of the tax-saving investments. They are a great way to earn high returns that surpass inflation. Conventional methods such as PPF and Fixed Deposits lose out to inflation in the longer run.
Why invest in ELSS funds is a great option?
It gets you high returns
Making investments in ELSS helps you get a diversified choice and thus can fetch you the returns that are not only higher than most of the other investment options that have tax saving benefits but can also get you in great financial state in the longer run. ELSS funds have two fold purpose, one is to help save taxes, and the other is to help generate higher returns.
Those who are ready and willing to make investments for a longer period, ELSS is the best option for them as it helps one get the most returns unlike other options. If one goes by all the evidence that depicts results of investments in ELSS, it is evident that more than 12 percent returns have been generated by ELSS.
They are Tax efficient
Yes, you read that right. ELSS mutual funds are not only helpful in generating higher returns but are also helpful in saving taxes. Even the Long term capital gains that are realized from ELSS mutual funds a total of 10% taxes are imposed if the total capital gain is more than Rs 1 lakhs in the said year of withdrawal. What’s even better is that no capital gain tax is imposed if the total profit is lesser than Rs 1 lakh in a financial year.
It has the least lock-in period
All of the traditional tax-saving investments have a really long lock-in periods and ELSS funds on the other hand have a lock-in of three years, only. Not only this, schemes such as PPF that has a lock-in period of fifteen years and NPS having a lock in period till one retires, are not even close to the returns that ELSS funds offer. The money invested in ELSS mutual funds has higher returns in shorter time span and the money does not have to be blocked for a long period.
It is convenient
ELSS mutual funds can have an investment of even a small amount. There is no minimum or maximum limit.
What are the top ELSS mutual funds?
There are several options out there. The top ones are:
- Canara Robeco Equity Tax Saver Fund
- Mirae Asset Tax Saver Fund
- Essel Long Term Advantage Fund
- Kotak Tax Saver
- DSP BlackRock Tax Saver Fund
- Aditya Birla Sun Life Tax Relief 96
- SBI Magnum Taxgain Scheme
- Reliance Tax Saver Fund
- Principal Tax Savings Fund
- ICICI Prudential Long Term Equity Fund
- HDFC Long Term Advantage Fund
- Sundaram Diversified Equity
These options are the top 12 ELSS mutual funds that are available. If you can wait out market fluctuations and can wait for a period of time then you can definitely make a high earning on your investments and can also save your taxes.
About the Author:
Kohal Dev, is a lawyer by profession and has a penchant for writing and his ability to juggle several tasks at a time, in the most effective and efficient manner is something that allows him to deliver content fresh out of the box. His extensive experience in the field of Law, Finance, Real Estate and Marketing allows him to write some of the most amazing blogs and articles in exactly the way they are required to be done. When not at work, he can be found reading and of course, writing.