Best ELSS Mutual funds to invest for tax savings in 2013

Best ELSS Mutual funds to invest for tax savings in 2013Best ELSS Mutual funds to invest for tax savings in 2013

Many of the investors are doing their tax planning from Apr itself instead of thinking during Dec/Jan. While there are several tax savings investment options, one of the best investment options for tax planning which has potential to provide more returns are Equity Linked Tax saving schemes (ELSS). In this article we would discuss about these equity linked saving schemes and how they can be used to enhance our returns through such investments.

Equity Linked Saving Schemes (ELSS) mutual funds

In simple terms Equity linked saving schemes (ELSS) are those which provide the investor, tax exemption/rebates under section 80C. Under this section, a tax payer can get exemption up to Rs 1 lakh by investing in various investment options like PPF, ELSS, Tax saving FD, NSC etc., However all investment options provide returns around 7% to 8.5% apart from tax saving. Investment in Top ELSS mutual funds provides greater chances to increase your investment apart from getting tax savings.

Where does equity linked saving schemes (ELSS) invest?

ELSS saving schemes invest 65% of its portfolio in equity related investments and are notified to avail tax benefits.

Also Read: Complete guide on National Saving Certificate (NSC) to save tax

Why should you invest in Best ELSS mutual funds?

Chances for higher returns: While you would get fixed returns in other tax saving options, if you invest in Best ELSS mutual funds, the returns would depend upon the equity markets and mutual fund scheme performance and there are greater chances that you would get higher returns compared to other tax saving options.

Tax saving option: Investment up to Rs 1 lakh in ELSS can be claimed for tax rebate under section 80C

Lock-in period helps for higher returns: The lock-in period for ELSS mutual funds are 3 years. For such tenure, there are higher chances that your mutual fund scheme performance generates more returns.

Tax free returns: The returns from all tax saving options except for PPF are not tax free. Means the returns on such investment options are taxable. E.g. The returns from NSC are taxable. It can be claimed thru 80C as deduction which is a different question. Returns from ELSS are tax free as the investment period is 3 years and any returns from equity mutual fund for more than one year is not taxed.

Best ELSS mutual funds to invest for tax saving

We have analyzed 4 best ELSS mutual funds which can be invested for tax planning purpose. However, instead of investing a lump sum amount, invest in these top ELSS mutual funds through SIP to get higher returns.

1) Axis Long Term equity:

  • Axis Long Term equity (qualified for tax saving mutual fund) has been ranked by Crisil as Rank-1 and as 3 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 11.3% in 3 years period and 19.5% in the last 1 year.
  • Assets under management are Rs 369 Crores, end of the last quarter which indicates that it gained investors confidence. This is one of the best ELSS mutual funds.

2) Can Rebeco Equity Tax Saver:

  • Can Rebeco tax saver have been ranked by Crisil as Rank-2 and as 5 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 10.7% in 5 years and 6.5% in 3 years period and 14.6% in the last 1 year.
  • Assets under management are Rs 506 Crores, end of the last quarter which indicates that it gained investors.

Also read: Latest info on Post office saving schemes in India

3) Franklin India Tax Shield:

  • Franklin India Tax Shield has been ranked by Crisil as Rank-2 and as 4 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 7.7% in 5 years and 7.9% in 3 years period and 13.7% in the last 1 year.
  • Assets under management are Rs 905 Crores, end of the last quarter which indicates that it gained investors.

4) Reliance tax saver:

  • Reliance tax saver has been ranked by Crisil as Rank-3 and as 5 Star (Out of 5) by Value research.
  • This scheme has delivered annualized returns of 8.5% in 5 years and 6.5% in 3 years period and 10.9% in the last 1 year.
  • Assets under management are Rs 2104 Crores, end of the last quarter which indicates that it gained investors confidence. This is one of the top ELSS mutual funds in terms of stability.

Invest In Top Tax Saving/ELSS Funds Online Today.

Conclusion: Investment in these best ELSS mutual funds provides tax savings and tax free returns. Instead of investing a lump sum, invest through SIP in these funds from beginning of the financial year and do the tax planning.

Readers, I would invite your views about this article.

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Best ELSS Mutual funds to invest for tax savings in 2013

Article by Suresh

Suresh KP i.e. me have written 500+ articles on this blog. I love doing analysis and identifying the Best investment options.


  1. BIPIN KANDARI says:

    present port follio

  2. Ricky says:

    Hi Suresh,

    I am investing in mutual funds from a long time (around 4 years). For some mutual funds, I am still investing through SIPs and for some, I had invested lumpsum amount. Right now, market condition is very bad. Please suggest whether I should balance my funds or start investing in new funds as a lumpsum amount? Which is the better option?

    I have HDFC top 200, HDFC equity fund, SBI equity, SBI Contra growth, Birla sunlife MNC growth. 

    New funds which I thought: ICICI Prudential bluechip, SBI emerging or Axis long term for tax saving

    Amount to be invested is 20,000

    Please suggest

    • Suresh says:

      Ricky, You should invest now when markets are falling. It is immaterial whether it is mutual funds or stocks. Don’t invest big lump sum now. e.g. if you have Rs 50K, invest in 2 to 3 lots over next 45 days to 60 days. Funds are good. Axis long term is ELSS scheme. All others are largecap and diversified funds. SBI Magnum contra growth is underperformer, you can like to revisit this and exit if required. 

  3. utkarsh says:


    i want to start SIP in ELSS MF, pl. suggest me the scheme as i will hold for next 10-15 years

  4. Vijaya Kumar says:

    Hi Suresh I dont have any idea on this till now. Now after reading your articles I am getting some knowledge on this. Thanks for ur valuable article.

     I wan to invest Rs.4500 montly through SIP in mutual funds. I don't need any tax savings funds right now. 

    1) How we can purchase MF through SIP everymonth?

    2) Should I need to take any account? If it is needed tell me ur option on this. 

    2)Please suggest me any 3 MF to invest for long term tenture of around 20 to 25 yrs. 



    • Suresh says:

      Hi Vijayakumar. Please open a mutual fund account with any broker like ICICI Direct or Once you open account, you can create a SIP request by selecting mutual funds. You need to keep funds in to your bank account on specific dates so that they would get executed every month. You can invest in HDFC Top-200, Birla SL Frontline and Franklin Templeton India Blue chip fund

  5. Ritesh Tambi says:

    Hii Suresh ,

    I would thanks to you for educating the investor regarding investment decision in Mutual Fund . I needed your advise . I am doing SIP in Three Tax Saving scheme , detail are as under :-

    1. Birla Sun Life Tax Saver 96 – G – Rs 2000 / Pm

    2 DSP Black Rock Tax Saver – G- Rs 2000 / Pm

    3 HDFC Tax Saver -G- Rs 3000 /Pm


    The Investment is continue since 2.5  years.  All these are performing negatively . I am confused whether the investment in all the scheme should be continue or not … Please advise 

    • Suresh says:

      Ritesh, Below are my comments 1) Birla SL Tax Saver-96 – ELSS -Crisil-Rank-4. This fund is underperformer. In long run, it may gain. You can review and exit 2) DSP BR Tax Saver – is ok – Crisil rank-3. You can hold for some more time 3) HDFC Tax saver – Crisil Rank-5. In long run, there are chances that it would gain. You can review and HOLD or exit.

  6. Ananda kumar N says:

    Hi Suresh,


    I would like to invest in any of the Mutual fund, hence please give me ur contact details. Thanks

    • Suresh says:

      Hi Anand, The funds recommended here are good for tax saving purpose. Regd other funds, nvest in diversified and large cap funds such as HDFC Top-200, Birla SL Frontline, ICICI Pru focussed blue chip fund, UTI MNC Fund and debt funds like HDFC Prudence etc., 

  7. Venu says:

    Hi suresh! Your suggestions are very good. I have ICICI bank account and I am ready to invest RS2000 in mutual fund particularly to save tax as well as for good returns. Shall I invest thru this bank or any other bank? Will they charge high? Pls advice.

    • Suresh says:

      Venu, If you want to invest in tax saving investment option through ICICI Bank, you can do that by investing in tax saver fixed deposit. What you are seeing this article is tax saving muttual funds. You need to open mutual fund account with any broker like or ICICI and purchase ELSS mutual funds to save tax.

  8. Satyain says:

    Hi Suresh,

     I’m planning to invest in ELSS Mutual Funds. I’m confused  to choose between Divinded and Growth plans.  Could you please  tell me which is the best  plan.

    Thanks and Regards,


    • Suresh says:

      Hi Satyain, If you do not want any regular income, you can invest in growth funds so that any returns would get re-invested and you would get profits only after you sell them. 

  9. namdev says:

    Hi suresh, my friends are suggesting me to invest in Relaince Tax Saver. I need your guidence as you have good knowledge of investment. shuold i go for Relaince ?

    • Suresh says:

      Reliance tax saver is Crisil-3 ranked ELSS mutual fund. You can invest, but there are other better funds like HDFC long term advantage or Can Robecco tax saver. You can try them too.

  10. Shreya says:

    I have a HDFC tax-saver growth plan. The locking period for the plan is completed should I continue to top up or when can I redeem the amount.

    Also which are other good ELSS plans I can got for. Please can you be specific mentioning the amount and period i should opt.


    Sorry but I dont have that much knowledge under this subject


    Please can you suggest

    • Suresh says:

      Shreya, Generally investors invest in ELSS only for tax purpose. However HDFC Tax saver growth plan is not doing good. In last 3 years it generated less than 0.5% annaulised returns. You may check and exit from such schemes. Here is the link where i recommended top ELSS funds. You can invest for 3 to 5 years period to get good returns.

      • Shreya says:

        Suresh, Thanks for the reply

        I was investing in HDFC tax saver growth as a SIP plan. Also ELSS and SIP are the same as SIP too qualify for tax exemptions? Please can you clarify the difference between ELSS mutual fund and SIP mutual funds.

        Also I have 6 lacs to invest. Please can you help me to make my portfolio to invest the amount. We are also considering some real estate options.


        Please can you advise

        • Suresh says:

          Mutual funds are various types like diversified, large cap or ELSS funds. SIP is an option to invest. You can invest ELSS funds in lumpsum (one time) or SIP through month on month. You can diverisify your portfolio by investing in real estate. If you are planning to invest a lumpsum, currently invest in debt mutual funds or balanced mutual funds. If you want to invest thru SIP, invest in large cap and diverisified for long term to get real benefit.

  11. Rajanandan says:

    Suresh, amazing to see many articles on investments to maximise money and especially on mutual funds with tax saving options. Below is my porfolio and want to invest more Rs.5000 in mutual funds through SIP for next 10 years.

    UTI Opportunities Rs. 1000 from Nov 2012

    HDFC Balanced Fund- Growth Rs. 1000 from Nov 2012

    ICICI Pru Discovery Fund – Reg Plan – Growth    Rs. 1000 from Feb'13.

    Thinking to invest in

    ICICI Pru Focus Blue chip Rs. 2000

    Increase Rs. 1000 in UTI Opportunities Fund

    Can Rebeco Equity Tax Saver Rs. 2000

    Please advise if can i go with above portfolio or do i need to do any changes. Hoping for high returns with Moderate returns.

    • Suresh says:

      Rajanandan, Good portfolio. However if you want to get higher returns, take some risk and add SBI FMCG or Reliance Pharma fund. These are high risk, but you can consider a small portion of 5% to 10% in your portfolio for sector funds, which would add flavor to your portfolio.

      • Rajanandan says:

        Thank you soo much you looking into my portfolio and for your response. If i take SBI FMCG or Reliance Pharma which fund should be stopped and how much should i invest?

        • Suresh says:

          Rajanandan, you can hold any of the funds you prescribed and take FMCG or Pharma fund. You can invest upto 10% of portfolio in such funds.

    • Rajanandan says:

      Thank you soo much you looking into my portfolio and for your response.

  12. Kishore says:

    Hi Suresh,

    If we invest in ELSS which is 3 year lock out period. At the time of meturity if the mutual fund value is down we have to take that right? else we have again continue to wait for the next tenure.

    Please correct me if I'm wrong.

  13. amarnath says:

    Hi Suresh,

    Its very interesting websites on investment. I loved it. Just have some clarification on my investments. Please let me know whether i am on the right way. I have invested in following mutual funds(SIP) for both tax benefits and personal finance purpose.

    Canara robecco equity tax saver – 3000/Month

    HDFX Tax saver – 2000/Month

    HDFC top 200 – 2000/Month

    Whether these are good funds. I want to continue all these funds for next 5 years through SIP. Also following new SIP i wanted to add

    Franklin India Taxshield – 2000/Month

    SBI Magnum Emerging Businesses Fund – Growth – 2000/Month

    Whether it will be good. Please let me know. I have stopped L&T tax advantage 1 year back. Have invested around 44000 in it. All these funds i wanted to invest for 10 years to fulfill my dream home. Let me know your suggestion on these and if any.

    • Suresh says:

      Hi Amarnath, 3/5 are ELSS schemes. If you have any extra earnings, keep adding diverisfied and largecap mutual funds in your portfolio. Otherwise the funds you have selected are good.

      • amarnath says:

        Thanks Suresh for your reply. Here i have made some correction to my investment. As i am preferably investing into ELSS for my tax purpose, i have added one or two into my portfolio. Hear is what it look like. Please let me know your view on this. I will continue to invest in these funds for the rest 5-10 years for sure unless and untill they perform good. Else i will switch to some other with best performing fund in te respective sector.

        MID & SMALL CAP:

        SBI Magnum Emerging Businesses Fund – Growth – 2000


        Canara Robeco Equity Tax Saver Regular – 3000
        Franklin India Taxshield – 1000
        HDFC Taxsaver – 2000

        Large & MidCap Funds

        HDFC Top 200 – 2000


        HDFC Balanced – 1000

        Large Cap Fund:

        UTI Opportunities – 1000

  14. Sumedh says:

    Dear Suresh,

    Please guide me as i'm bit confused, I've started investing in HDFC Long Term Advantage Fund last year, i want to know whether this fund is good to continue, or i should start sip with Axis Long Term equity fund.

    • Suresh says:

      Sumedh, Don’t worry. I have given top-4 ELSS mutual funds. There are several other good ELSS funds like HDFC Long term advantage fund. The returns are also good and crisil rank-2. You can continue existing SIP.

  15. selvakumar says:

    i want clarify about ELSS plan pls reply me

  16. Robin says:

    Hi Suresh,

    I am planning to invest in ELSS for tax saving and in any other good SIP mutual fund. Can you please suggest whom to contact for opening a SIP account and the best funds. IS HDFC ELSS a good tax saving fund?




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