ELSS Mutual Funds

Equity Linked Savings Schemes (ELSS) are a popular category of mutual funds that offer the dual benefit of tax savings and long-term wealth creation. These funds primarily invest in equities and come with a mandatory lock-in period of three years. Under Section 80C of the Income Tax Act, investments in ELSS are eligible for tax deductions of up to ₹1.5 lakh per financial year. As one of the most efficient tax-saving options available, ELSS not only helps reduce your taxable income but also provides an opportunity to participate in the growth potential of the stock market. Let’s explore what makes the best ELSS mutual funds a compelling investment choice.

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List of ELSS Mutual Funds

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Search Result - 49 Mutual Funds

Fund Name	Fund Size (Cr.)	3Y Returns	5Y Returns	Invest Now
Motilal Oswal ELSS Tax Saver Fund-Dir Growth Equity ELSS - Tax Saver Fund	5,134	22.33%	17.33%	Invest
SBI Long Term Advantage Fund - Series V -Dir Growth Equity ELSS - Tax Saver Fund	381	21.14%	15.29%	Invest
ITI ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	463	17.90%	13.24%	Invest
JM ELSS - Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	248	17.08%	13.99%	Invest
HSBC ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	4,229	16.74%	12.84%	Invest
WhiteOak Capital ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	507	16.55%	0.00%	Invest
Bank of India Midcap Tax Fund - Series 1 - Direct Growth Equity ELSS - Tax Saver Fund	68	15.77%	11.99%	Invest
Baroda BNP Paribas ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	930	15.74%	11.63%	Invest
Quant ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	13,458	15.37%	15.01%	Invest
Bank of India Midcap Tax Fund - Series 2 - Direct Growth Equity ELSS - Tax Saver Fund	34	14.85%	11.14%	Invest

Fund Name	1Y Returns	Rating	Fund Size (Cr.)
Motilal Oswal ELSS Tax Saver Fund-Dir Growth Equity ELSS - Tax Saver Fund	9.59% Fund Size (Cr.) - 5,134 Invest
SBI Long Term Advantage Fund - Series V -Dir Growth Equity ELSS - Tax Saver Fund	2.39% Fund Size (Cr.) - 381 Invest
ITI ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	4.49% Fund Size (Cr.) - 463 Invest
JM ELSS - Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	9.01% Fund Size (Cr.) - 248 Invest
HSBC ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	4.93% Fund Size (Cr.) - 4,229 Invest
WhiteOak Capital ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	3.49% Fund Size (Cr.) - 507 Invest
Bank of India Midcap Tax Fund - Series 1 - Direct Growth Equity ELSS - Tax Saver Fund	11.18% Fund Size (Cr.) - 68 Invest
Baroda BNP Paribas ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	4.99% Fund Size (Cr.) - 930 Invest
Quant ELSS Tax Saver Fund - Direct Growth Equity ELSS - Tax Saver Fund	9.25% Fund Size (Cr.) - 13,458 Invest
Bank of India Midcap Tax Fund - Series 2 - Direct Growth Equity ELSS - Tax Saver Fund	7.25% Fund Size (Cr.) - 34 Invest

What are ELSS Mutual Funds?

The ELSS Fund full form is Equity Linked Savings Scheme, a type of mutual fund designed to offer tax-saving benefits along with investment growth. It refers to funds that invest mainly in equities and qualify for tax deductions under Section 80C, making them popular for tax planning. ELSS Funds also include a mandatory lock-in period of three years.

These funds carry a moderate to high risk due to equity exposure, making them suitable for investors with a longer investment horizon who want to save taxes while aiming for better returns.

How do ELSS Mutual Funds Work?

To understand what is ELSS mutual fund, it is important to understand how these funds work. They are designed to help investors save taxes while growing their money through equity investments. When you invest in these funds, your money is pooled with other investors’ and managed by professionals who aim to generate good returns over time. Here’s how these funds work:

1. Investors put money into ELSS Mutual Funds, which are then invested in stocks.
2. These funds primarily invest in equities across large, mid, and small-cap companies.
3. There is a mandatory lock-in period of three years before you can redeem your investment.
4. The funds are actively managed by professionals who research and select stocks to aim for better returns.
5. Investments in ELSS Funds qualify for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh annually.
6. Through this process, ELSS Funds offer the potential for long-term wealth growth combined with tax savings.

Types of ELSS Mutual Funds

ELSS Funds come in different types based on how the returns are paid out and the plan structure. Knowing the ELSS Fund Types helps investors choose wisely, i.e. according to their income needs and investment goals.

1. Growth Option: In this type, profits earned by the fund are reinvested, which increases the Net Asset Value (NAV). Investors benefit from capital appreciation over time, but no regular payouts are made.
2. Dividend Option: The fund periodically distributes dividends from its profits to investors as income. This suits those looking for regular returns.
3. Dividend Reinvestment Option: Instead of receiving dividends as cash, they are automatically used to buy more units of the fund, in turn helping grow the investment over time.
4. Direct Plan: This plan allows investors to invest directly with the fund house without intermediaries, resulting in lower fees and potentially higher returns.

Features and Benefits of ELSS Mutual Funds

1. Tax Savings: One of the main features of ELSS is the tax deduction benefit under Section 80C, which lets you save up to ₹1.5 lakh annually.
2. Equity Exposure: ELSS Mutual Funds primarily invest in equities. This means, they offer higher potential for long-term returns compared to traditional tax-saving options.
3. Shortest Lock-in Period: With a lock-in of just three years, ELSS Tax Saving Mutual Funds have the shortest lock-in among tax-saving investments.
4. Professional Management: Fund managers actively select stocks to balance risk and return, aiming to grow your investment efficiently.
5. Dual Benefit: The biggest ELSS Mutual Funds benefit is the combination of tax savings and wealth creation through equity investing.

Who Should Invest in ELSS Mutual Funds?

1. First-Time Investors: ELSS is a good starting point for those new to equity investing. It offers market exposure with the added advantage of tax savings.
2. Taxpayers Looking for Deductions: Salaried individuals and professionals who want to reduce taxable income under Section 80C can benefit from investing in ELSS.
3. Long-Term Wealth Builders: If you have a long-term horizon and can stay invested for at least three years, ELSS offers potential for capital appreciation.
4. Moderate-to-High Risk Takers: Since ELSS primarily invests in equities, it suits investors comfortable with market-linked returns and moderate risk.

How to Invest in ELSS Mutual Funds?

Making your ELSS investment is simple and can be done in a few easy steps with 5paisa. Here’s how to get started:
Choose the Right ELSS Fund: Begin by comparing different ELSS mutual funds based on past performance, fund manager expertise, risk profile, and investment objective. Pick a fund that aligns with your financial goals and risk appetite.

1. Complete Your KYC: To proceed with any ELSS investment, you must complete your Know Your Customer (KYC) process. You can use the 5paisa app to experience a hassle-free KYC process.
2. Decide Between SIP or Lump Sum: Choose whether you want to invest a fixed amount regularly through a Systematic Investment Plan (SIP) or invest a one-time lump sum. SIPs are ideal for building discipline, while lump sum suits those with idle funds.
3. Use a Trusted Platform Like 5paisa: You can invest in some of the best ELSS funds seamlessly through the 5paisa app, which is user-friendly, secure, and convenient. It allows you to explore fund options, track performance, and manage your investments all in one place.
4. Monitor Your Investment: Once your ELSS investment is made, regularly monitor fund performance and stay updated on market trends. The 5paisa app makes it seamless.

Factors to Consider While Investing in ELSS Mutual Funds

1. Investment Horizon: Investing in ELSS Mutual Funds is best suited for individuals with a medium to long-term outlook. Although the mandatory lock-in period is three years, staying invested for at least 5–7 years can help you ride out market volatility and benefit from compounding.
2. Returns Are Market-Linked: ELSS funds invest in equities, which means returns depend on market performance. Unlike fixed-return instruments, ELSS investments do not guarantee returns. However, over the long term, they often outperform traditional tax-saving options.
3. Lock-in Period: Every ELSS investment comes with a fixed lock-in of three years. You cannot redeem or switch your units before this period ends. This encourages long-term investing and discipline, but also limits liquidity.
4. Risk Profile: Since ELSS funds invest in equity markets, they carry moderate to high risk. If you're not comfortable with short-term market fluctuations, consider your risk appetite before investing in ELSS mutual funds.

Tax Rules For ELSS Mutual Funds

1. Tax Deduction Under Section 80C: One of the primary ELSS tax benefits is that investments of up to ₹1.5 lakh in a financial year are eligible for deduction under Section 80C of the Income Tax Act. This helps reduce your overall taxable income.
Lock-in Period and Tax Efficiency: ELSS comes with a 3-year lock-in, which not only promotes disciplined investing but also qualifies it as a long-term investment for favourable tax treatment.
Long-Term Capital Gains (LTCG) Tax: Any gains from ELSS investments are treated as long-term capital gains. Gains up to ₹1.25 lakh in a financial year are tax-free. Gains above ₹1.25 lakh are taxed at 12.5% without indexation benefits.

Risks Involved When Investing in ELSS Funds

1. Market Risk: ELSS mutual funds invest primarily in equities, making them sensitive to market volatility. Returns are not guaranteed and can vary based on market movements.
2. Liquidity Risk: ELSS comes with a mandatory 3-year lock-in period. During this time, investors cannot redeem or switch their units, which limits liquidity in the short term.
3. Fund Manager Risk: ELSS funds are actively managed, and their performance can vary based on the fund manager's decisions. A poorly managed fund may underperform even if markets are doing well.
4. Concentration Risk: Some ELSS funds may have a higher allocation to certain sectors or market caps. This lack of diversification can increase vulnerability to sector-specific downturns.

Comparison of ELSS Funds with Other Tax Saving Instruments

Investment Option	Returns (Approx.)	Lock-in Period	Tax on Returns
5-Year Bank Fixed Deposit	4% to 6%	5 years	Fully Taxable
Public Provident Fund (PPF)	7% to 8%	15 years	Tax-Free
National Savings Certificate (NSC)	7% to 8%	5 years	Fully Taxable
National Pension System (NPS)	8% to 10%	Till Retirement	Partially Taxable
ELSS Funds	15% to 18%	3 years	Partially Taxable

Popular ELSS Mutual Funds

Fund Name
Min Investment Amt
AUM (Cr)
3Y Returns

ELSS Mutual Funds

List of ELSS Mutual Funds

Category

Sub Category

Rating

What are ELSS Mutual Funds?

How do ELSS Mutual Funds Work?

Types of ELSS Mutual Funds

Features and Benefits of ELSS Mutual Funds

Who Should Invest in ELSS Mutual Funds?

How to Invest in ELSS Mutual Funds?

Factors to Consider While Investing in ELSS Mutual Funds

Tax Rules For ELSS Mutual Funds

Risks Involved When Investing in ELSS Funds

Comparison of ELSS Funds with Other Tax Saving Instruments

Popular ELSS Mutual Funds

Motilal Oswal ELSS Tax Saver Fund-Dir Growth

₹ 500

₹ 5,134

22.33%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 5,134

3Y Returns

22.33%

SBI Long Term Advantage Fund - Series V -Dir Growth

-

₹ 381

21.14%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 381

3Y Returns

21.14%

ITI ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 463

17.90%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 463

3Y Returns

17.90%

JM ELSS - Tax Saver Fund - Direct Growth

₹ 500

₹ 248

17.08%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 248

3Y Returns

17.08%

HSBC ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 4,229

16.74%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 4,229

3Y Returns

16.74%

WhiteOak Capital ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 507

16.55%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 507

3Y Returns

16.55%

Bank of India Midcap Tax Fund - Series 1 - Direct Growth

-

₹ 68

15.77%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 68

3Y Returns

15.77%

Baroda BNP Paribas ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 930

15.74%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 930

3Y Returns

15.74%

Quant ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 13,458

15.37%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 13,458

3Y Returns

15.37%

Bank of India Midcap Tax Fund - Series 2 - Direct Growth

-

₹ 34

14.85%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 34

3Y Returns

14.85%

Other Calculators

Frequently Asked Questions

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ELSS Mutual Funds

List of ELSS Mutual Funds

Category

Sub Category

Rating

What are ELSS Mutual Funds?

How do ELSS Mutual Funds Work?

Types of ELSS Mutual Funds

Features and Benefits of ELSS Mutual Funds

Who Should Invest in ELSS Mutual Funds?

How to Invest in ELSS Mutual Funds?

Factors to Consider While Investing in ELSS Mutual Funds

Tax Rules For ELSS Mutual Funds

Risks Involved When Investing in ELSS Funds

Comparison of ELSS Funds with Other Tax Saving Instruments

Popular ELSS Mutual Funds

Motilal Oswal ELSS Tax Saver Fund-Dir Growth ₹ 500 ₹ 5,134 22.33% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 5,134 3Y Returns 22.33%

SBI Long Term Advantage Fund - Series V -Dir Growth - ₹ 381 21.14% Min SIP Investment Amt - AUM (Cr.) ₹ 381 3Y Returns 21.14%

ITI ELSS Tax Saver Fund - Direct Growth ₹ 500 ₹ 463 17.90% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 463 3Y Returns 17.90%

JM ELSS - Tax Saver Fund - Direct Growth ₹ 500 ₹ 248 17.08% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 248 3Y Returns 17.08%

HSBC ELSS Tax Saver Fund - Direct Growth ₹ 500 ₹ 4,229 16.74% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 4,229 3Y Returns 16.74%

WhiteOak Capital ELSS Tax Saver Fund - Direct Growth ₹ 500 ₹ 507 16.55% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 507 3Y Returns 16.55%

Bank of India Midcap Tax Fund - Series 1 - Direct Growth - ₹ 68 15.77% Min SIP Investment Amt - AUM (Cr.) ₹ 68 3Y Returns 15.77%

Baroda BNP Paribas ELSS Tax Saver Fund - Direct Growth ₹ 500 ₹ 930 15.74% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 930 3Y Returns 15.74%

Quant ELSS Tax Saver Fund - Direct Growth ₹ 500 ₹ 13,458 15.37% Min SIP Investment Amt ₹ 500 AUM (Cr.) ₹ 13,458 3Y Returns 15.37%

Bank of India Midcap Tax Fund - Series 2 - Direct Growth - ₹ 34 14.85% Min SIP Investment Amt - AUM (Cr.) ₹ 34 3Y Returns 14.85%

Other Calculators

Frequently Asked Questions

Open Free Demat Account

Motilal Oswal ELSS Tax Saver Fund-Dir Growth

₹ 500

₹ 5,134

22.33%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 5,134

3Y Returns

22.33%

SBI Long Term Advantage Fund - Series V -Dir Growth

-

₹ 381

21.14%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 381

3Y Returns

21.14%

ITI ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 463

17.90%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 463

3Y Returns

17.90%

JM ELSS - Tax Saver Fund - Direct Growth

₹ 500

₹ 248

17.08%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 248

3Y Returns

17.08%

HSBC ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 4,229

16.74%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 4,229

3Y Returns

16.74%

WhiteOak Capital ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 507

16.55%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 507

3Y Returns

16.55%

Bank of India Midcap Tax Fund - Series 1 - Direct Growth

-

₹ 68

15.77%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 68

3Y Returns

15.77%

Baroda BNP Paribas ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 930

15.74%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 930

3Y Returns

15.74%

Quant ELSS Tax Saver Fund - Direct Growth

₹ 500

₹ 13,458

15.37%

Min SIP Investment Amt

₹ 500

AUM (Cr.)

₹ 13,458

3Y Returns

15.37%

Bank of India Midcap Tax Fund - Series 2 - Direct Growth

-

₹ 34

14.85%

Min SIP Investment Amt

-

AUM (Cr.)

₹ 34

3Y Returns

14.85%