The tax filing season just got over and the best way to be on top of your taxes is to plan ahead. It is always better to start your tax planning exercise at the beginning of the financial year. One of the best options to invest in, to save your taxes are Equity Linked Saving Schemes (ELSS) funds/Tax Saver Funds. Investments in ELSS qualify for tax deductions up to INR 1.5Lakhs under section 80C.
Why ELSS for tax savings?
- ELSS are funds that invest majority of the funds in equity which give you higher returns over a longer period as compared to debt investments like PPF
- ELSS funds have the shortest mandatory lock in period of 3 years as compared to other tax saving instruments under section 80C
Why Start Today?
- It is always better to stagger investments in equity to get the benefit of rupee cost averaging in a volatile market
- Investing regularly imparts a financial discipline
- Starting an SIP today avoids last minute struggle to invest to save taxes
Some of the top performing ELSS Funds you can consider to invest in are:
| Name of the Fund | 1 year return (%) | 3 years return (%) | 5 years return (%) | Return Since inception (%) |
| Axis Long Term Equity Fund | 18.14 | 15.08 | 26.07 | 19.09 |
| Aditya Birla Sun Life Tax Relief’96 | 17.09 | 17.34 | 24.89 | 25.33 |
| Invesco India Tax plan | 17.80 | 16 | 23.85 | 15.29 |
| Principal Tax savings Fund | 9.73 | 18.36 | 23.28 | 16.95 |
| IDFC Tax Advantage (ELSS) | 9.42 | 15.49 | 22.84 | 19.94 |
Source: Value Research, 7th September, 2018
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