Shaifaly Girdharwal

Shaifaly GirdharwalIt is the time of year when most of people invest in various products to claim the deduction under Income Tax Act. Surprising that most of them choose either bank FD’s or PPF as their first priority for Tax saving although from so many years Equity Linked Savings Scheme (ELSS) has emerged as best product for tax saving investments in Indian market.

An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund which gives following advantage-

  • Opportunity to grow your money.
  • Qualifies for tax exemptions under section u/s. 80C of the Indian Income Tax Act.
  • Long-term capital gains from these funds are tax free in your hands. However as per Finance Act 2018 LTCG on ELSS (equity oriented) in Excess of Rs 1 lakh is taxable @ 10% (Surcharge+HEC) without indexation under section 112A.
  • Shorter lock-in period of 3 years as compared to NSC & PPF
  • Exposure to equity results in high earning potential
  • Dividend payout option enables gains even during lock-in period
  • Investing through Systematic Investment Plan (SIP) averages out your investments over a period of time

Even when markets were negative, ELSS has given fair returns with double tax exemption, not only you can claim the exemption u/s 80 C but also the gains will be exempt from tax. Lack of awareness and half knowledge is the most prominent reason for the same. Following is the list of Top performing ELSS.

Tax Saving Scheme Fund Return % Rank
Axis Long Term Equity Fund 25.6 1
SBI Tax Advantage Sr-2 (G) 24.6 2
ABSL Tax Relief ‘96-Direct G Relief 96 24.4 3
ICICI PRU Right Fund -G 23.8 4
Invesco India Tax Plan- DP (G) 23.6 5
IDFC Tax Adv.( ELSS)-Direct (G) 23.4 6
ABSL Tax Relief-96 (G) 23.3 7
Escort Tax Plan-(G) 23.1 8
ABSL Tax Plan -(G) 22.6 9
IDFC Tax Advantage (ELSS)-RP (G) 22 10

Now you can see the difference in return of FD and PPF and ELSS. According to most of the experts in the street ELSS is still the best option to make 80C investments as steep fall in the prices of crude will work as a boon for India. Indian markets will continue to perform robustly.

Points to remember while choosing an appropriate ELSS
You must always remember to do thorough research when you invest in an ELSS fund. You must look at the long term performance of the fund before putting your money in it. Also remember to look at the fund details like the fund manager’s investment approach, portfolio of the fund, the expense ratio of the fund and how volatile the fund has been in the past.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

(For any query post in comment or mail [email protected] – Contact: 9953077844)

Read Other articles of Shaifaly Girdharwal

(Republished with Amendments on 25.06.2018)

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  1. Suresh Babu says:

    can a new invester claim both ELSS and RGESS tax benefits for 1st three years. I mean 1.5lakhs in ELSS+PPF+EPF and 50K in RGESS.

  2. chandan says:

    1. ‘how much tax saving is allowed in 80C in AY 2016-17 for ELSS for people on 30% tax
    bracket ? Last AY 2015-2016 the max tax saving on ELSS was 25000/- only
    for 30% bracket income category

    – how much is allowed this year 2016 ? incase PF is saving 1L and for rest 50,000 I tried calculator and there indicating 30% tax bracket if i put a ELSS investment of any figure more than 50,000/- it calculates the saving on ESS as 25000/- max only as a cap. But this calculator is for AY2015-16 , so i am not sure if the tax law IT 1961 has changed the ESS tax saving cap for 30% bracket people in current AY 2016-17.
    Can you tell me being a tax law year and where it is mention in the IT act – need the valid reference URL from india govt mentioning the figure.

  3. CA Shivkumar H says:

    I want to know if the investment is done in the minor name, whether parents/guardian can claim the exemption u/s 80C?
    Explain in detail plz.

  4. RAJESH GUMBER says:


  5. Malay Mandal says:

    Thanks for your details of deduction U/s 80C. Pls confirm the maximum amount I can deposit in ELLS scheme? Can I deposit entire 1.5L in ELSS & get full deduction or there is any limit for ELSS.
    Kindly reply.
    Thanks & good wishes,
    Malay Mandal

  6. Anup says:

    Thanks for your details of deduction U/s 80C. Pls confirm the maximum amount I can deposit in ELLS scheme? Can I deposit entire 1.5L in ELSS & get full deduction or there is any limit for ELSS.

    Kindly reply.

    Thanks & good wishes,

  7. Srinivas says:

    I am a beginner in investments, I want to understand the terminology what is fundreturn and benchmark return. Could anyone please help me in understanding these terminologies.

    Thanks in Advance!!

  8. Manoj says:

    Dear Sir,
    I am working in an autonomous body of Govt. of India. I have joined service on 16th January 2013. After my training period of 1 year, i took charge as Assistant Engineer. My NPS account was opened after my confirmation and I have paid Rs.53491 for FY 2014-15 and an arrears of Rs.51214 for FY 2013-14 towards NPS i.e. I have paid a total of Rs.104705 towards NPS in this FY only. Same amount is contributed by the organisation.

    The problem is they added the total amount i.e., Rs.104705 to my gross but are deducting only Rs.53491 and saying that I have to pay tax for remaining Rs.51214. Many of my colleagues who joined with me are facing the similar problem. Please clarify on this issue & suggest if there is any section for exempting the arrears. Please reply as soon as possible. Urgent.

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June 2021