Among the many tax savings schemes that you have, Equity Linked Savings Scheme, have outperformed every other tax saving scheme. These are mutual funds which are exposed to equities along with tax benefits which makes it an attractive investment avenues. Investment in ELSS will provide tax relief under Sec 80C of Income Tax Act.
The lock in period for this investment is 3 years, which is the lowest for any tax saving scheme.
Individuals who are looking for investment with tax benefits can consider this as an option. Young investors can start with amount as small as Rs 500 unlike equity mutual funds where the minimum investment is Rs 5000.
Returns on the scheme are based on the performance of equities. ELSS are diversified equity schemes and can help you create wealth over the long-term.
Mutual fund experts usually suggest to opt for SIP rather than investing lumpsum and growth option for individuals looking for wealth creation in direct option.
Here are 6 best ELSS funds based on CRISIL ranking:
Birla Sun Life Tax Relief 96
Birla Sun Life Tax Relief 96 has been rated number one by CRISIL, while Value Research Online has accorded it a 4 star rating. The fund has generated a return of 30 per cent on an average every year, in the last 3 years. How many investments can do that?
Interestingly, there is no exit load that is applicable on the fund and the minimum SIP Investment is Rs 500.
The portfolio comprises names like ICICI Bank and Honeywell Automation.
Axis Long Term Equity Fund
Axis Long Term Equity Fund is one of the most recommended funds under ELSS. Both CRISIL and Value Research Online have rated the fund as "five-star".
In the last three years the fund has generated a return of 30 per cent. Some of the bluest of blue chips form part of the fund's portfolio which makes it a worthy pick. Since inception the fund has provided return of 19.52 per cent.
The portfolio comprises names like HDFC Bank, Kotak Mahindra Bank and Sun Pharma.
Tata India Tax Savings Fund
The Tata India Tax Savings Fund is an open ended equity linked tax saving scheme (ELSS) with a compulsory lock-in period of three years.
Stocks selected using a mix of top-down and bottom-up approach to stock selection.
It is top ranked by CRISIL ratings. In the last three years the fund has generated a return of 26 per cent.
Not a bad bet from a long term perspective.
Birla Sun Life Tax Plan
Birla Sun Life Tax Plan has been rated No 2 by CRISIL, while Value Research Online has rated the fund as "four-star".
In the last three years the fund has generated a return of 28 per cent. The portfolio comprises names like Sundaram Clayton, Honeywell Automation and Kotak Mahindra Bank.
Since inception of this fund it has given returns of around 21%.
DSP BlackRock Tax Saver Fund
DSP BlackRock Tax Saver Fund is rated second by CRISIL and Value Research has rated the fund as "Four Star".
It has given 14.5 per cent return since inception of the fund. In the last three years the fund has generated a return of 28.44 per cent. The portfolio comprises stocks like Infosys, TCS and ICICI Bank.
Franklin India Taxshield Fund
Franklin India Taxshield Fund fund has generated a return of 27per cent on an average each year, in the last three years. The Net Asset Value of the fund is around Rs 468.
Since inception, the fund has given a return of 24.67 per cent. The portfolio comprises stocks like HDFC Bank, TCS and SBI.