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Top ELSS Funds To Invest In 2021
Tax saving is a meticulous exercise and it is advised if you start it early in the financial year. This is as in an unhurried way, you will be able to better evaluate the amount of fresh investments you need to make for saving maximum tax for the financial year FY22.
Now, the best investment can be tax saving mutual funds or equity linked savings scheme (ELSS).
What are tax saver mutual funds or ELSS?
Equity linked savings scheme (ELSS) invest majorly in equity schemes and are tax saving as investments in them qualify for tax deduction up to Rs. 1.5 lakh in a financial year under Section 80C of the Income tax Act. And for providing the maximum benefit to investors, these ELSS scheme carry a mandatory lock in period of 3 years.
And on redemption after 3 years, there will be long term capital gains tax implications and will be taxed at the rate of 10 percent.
Here are the top performing ELSS funds for investment in 2021:
1. Quant Tax Plan- Growth:
This is a CRISIL 5-star rated fund with an asset size of Rs. 106 crore. The fund's expense ratio is of 2.48 percent. The scheme's benchmark is Nifty 50 TRI. 1-year return from the fund has been a huge 115%. Top stocks in the portfolio of this fund include Stylam Industries, Fortis Healthcare, Thyrocare Technologies, Infosys, Sun Pharma and TCS among others.
Investors who are looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.
| Tax saver funds | 1-year return | 3-year return | 5-year return |
|---|---|---|---|
| Quant tax plan | 115% | 22% | 22% |
2. Mirae Asset tax saver funds:
This is a 4-star CRISIL rated fund. Fund size is a huge Rs. 6934 crore. NAV as on April 26, 2021 is 25.229. 1-year return from the fund is 69.72 percent. Top 10 stocks in the portfolio include HDFC Bank, Infosys, Axis Bank, ICICI Bank, TCS and Bharti Airtel among others. The scheme is suitable for investors who are looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.
| Tax saver funds | 1-year return | 3-year return | 5-year return |
|---|---|---|---|
| Mirae Asset tax saver fund | 69.72% | 15.44% | 19.98% |
3. Canara Robeco Equity Tax saver fund:
This is a 5-star CRISIL rated fund with a Rs. 1931 crore asset size.Expense ratio of the fund is 2.32 percent. As per the risk o meter, the fund carries a low to moderate risk. The fund is suitable for those looking to invest money for at least 3 years and looking for additional benefits of income tax saving apart from higher returns expectations. At the same time, these investors should also be ready for possibility of moderate losses in their investments and 3 year lock-in period.
| Tax saver funds | 1-year return | 3-year return | 5-year return |
|---|---|---|---|
| Canara Rpbeco Equity tax saver fund | 58.4% | 15.28% | 15.85% |
For the best selection of ELSS funds, investors shall be better off by sticking with funds that have managed to continuously beat their benchmark returns over the long term. And it shall be useless to go by stocks that have performed good in the past, as the past returns shall not determine the course of future returns from the product.
Tax treatment of ELSS
Long term capital gains of ELSS will be tax exempt up to Rs. 1 lakh and dividend received shall also be tax free in the hands of investors.
SIP In ELSS
You can also make the most of your ELSS investment, by starting a SIP in it. This is to stagger your investments over time as well as invest a small sum at regular interval.
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