While equity mutual funds give investors an opportunity to invest in stocks in a passive way, they also have a lock-in period of 3 years which is the shortest among all Section 80C tax saving options. Gains on equity funds are subject to taxation at 15% for a holding period of less than a year and at 10% for more than a year if gains are over Rs 1 lakh.
We bring to you the 10 best tax-saving mutual funds purely on the basis of returns for a time period between 3 and 5 years.
Tax-saving mutual funds invest at least 80% of their assets in equities. The tax-saving mutual funds are essentially equity-linked saving schemes (ELSS) that offer tax benefits to investors under Section 80C of the Income Tax Act, 1961.
Tax-saving mutual funds offer the benefit of maximizing portfolio returns over the long term. However, investors should also be wary of the risk associated with equity investing compared to the other tax-saving fixed-income instruments like Public Provident Fund (PPF) & others.
5 best tax-saving mutual funds purely on the basis of returns for different time periods are as follows:
For 3 years
1) Quant Tax Plan (33.04%)2) BOI AXA Tax Advantage (23.75%)
3) Mirae Asset Tax Saver Fund (20.04%)
4) Canara Robeco Equity Tax Saver (19.84%)
5) IDFC Tax Advantage (ELSS) (18.89%)
For 5 years
1) Quant Tax Plan (22.50%)
2) BOI AXA Tax Advantage (18.26%)
3) Mirae Asset Tax Saver Fund (18.22%)
4) Canara Robeco Equity Tax Saver (17.26%)
5) IDFC Tax Advantage (ELSS) (16.24%)
These funds offer dual benefits of tax saving and wealth creation over the long run.
Inputs from ET Mutual Fund Screener
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)