Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

Few days back, I have written an article about Tax saving bank FD schemes and several readers appreciated that it indeed was a useful info for them during this time. A couple of my friends advised me to write about top tax saving mutual funds in India to invest for tax saving (ELSS). Dec is approaching very fast and salaried individuals need to plan for their tax savings. Salaried individuals can invest in tax saving mutual funds / ELSS mutual funds as part of section 80C up to Rs 1 Lakh. In this article, I would detail about best tax saving mutual funds in India to invest for 2014.

What are tax saving mutual funds (ELSS)?

Tax Saving Mutual funds (ELSS-Equity Linked Saving Schemes) primary objective is to provide tax rebated u/s 80C (Maximum u/s 80C is Rs 1 Lakh) along with providing higher returns. ELSS Mutual funds have a lock-in period of 3 years from the date of investment.

Also read: Best Large cap mutual funds to invest for long term

Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014

  • These top 5 mutual funds in India have been arrived based on below parameters.
  • Top 5 funds picked based on highest returns received in the last 3 to 5 years
  • Funds which are rated by Crisil as Rank-1, Rank-2 and Rank-3 which specifies good fundamentals for these top 5 mutual funds.
  • Value research rated these mutual funds as 5 star and 4 star.
  • AUM (Assets under management) > 100 Crores. This proves investor confidence among these top 5 mutual funds.

Top # 1: Can Robeco Equity TaxSaver

Strategy of the fund: This fund invests in large cap and mid-cap companies and can invest in small-cap as and when the opportunity arises. It invests majorly in financial services and technology companies.

Performance of the fund: This is a top performing mutual fund and its 5 year returns are 23% per annum which has beaten even equity mutual fund returns. It gave 8% returns in last 1 year.

Reasons to invest: This fund consistently beats its peer mutual fund schemes and its benchmark. One should have this fund in their portfolio. AUM of this scheme is Rs 550 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-2 and Value Research rates this as 5-Star (5 out of 5).

Top # 2: ICICI Pru tax Plan Mutual fund

Strategy of the fund: This fund invests in large cap up to 65% of its portfolio and balance in mid-cap companies. Its investment strategy is to invest for 3 to 5 years in growth companies across market capitalization.

Performance of the fund: This is a 2nd top performing mutual fund and its 5 year returns are 22.5% per annum which has beaten even equity mutual fund returns. It yielded 10% returns in last 1 year.

Reasons to invest: This is diversified multi-cap fund with average risk and high growth prospects. One should have this fund in their portfolio. AUM of this scheme is Rs 1,353 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-3 and Value Research rates this as 4-Star (4 out of 5).

Top # 3: Franklin India Tax Shield Mutual fund

Strategy of the fund: This fund’s primary objective is to invest in medium to long term in growth companies and provide investors with IT rebate.  It invests in 50 to 55 companies across various market capitalization.

Performance of the fund: This is a 3rd top performing mutual fund and its 5 year returns are 19% per annum which has beaten even equity mutual fund returns. It yielded 9.6% returns in last 1 year.

Reasons to invest: This scheme is from one of the reputed old houses which has vast experience and works well in volatile markets too. AUM of this scheme is Rs 890 Crores which shows investor confidence for the scheme. Crisil Ranks this mutual fund as Rank-2 and Value Research rates this as 5-Star (5 out of 5).

Top # 4: BNP Paribas Tax Advantage plan Mutual fund

Strategy of the fund: It aims to get long term capital growth by diversifying its portfolio across various sectors.

Performance of the fund: This is the 4th top performing mutual fund under tax saving and its 5 year returns are 17.6% per annum. It yielded 12.9% returns in last 1 year.

Reasons to invest: It has beaten equity mutual funs performance. AUM of this scheme is Rs 129 Crores which shows investor confidence for the scheme. Crisil Ranks this mutual fund as Rank-1 and Value Research rates this as 5-Star (5 out of 5).

Also Read: How salaried individual can save income tax from 80C and beyond?

Top # 5: Axis Long Term Equity Fund

Strategy of the fund: Invests in a diversified portfolio of strong growth companies with sustainable business model. Its benchmark is BSE-200 stocks, but invests beyond that. It invests 50% in large cap and balance in other market capitalization stocks.

Performance of the fund: This is a 5th top performing mutual fund under tax saving and its 3 year returns are 7% per annum. It yielded 13.5% annaulised returns in the last 2 years.

Reasons to invest: Fund has flexible to invest across all sectors and market capitalization. The performance of the fund shows the confidence and future prospects. AUM of this scheme is Rs 635 Crores which shows investor confidence in the scheme. Crisil Ranks this mutual fund as Rank-1 and Value Research online ranks it as a 5-Star rating.

Conclusion: Tax saving mutual funds (ELSS) provides good opportunity for individuals who are looking to save tax u/s 80C and to get higher returns. Investing in these top 5 mutual funds provides scope for you to diversify your investments and yield higher returns over a period of time.

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Top 5 Tax Saving Mutual funds (ELSS) in India to invest for 2014


  • shekhar

    nice article

  • Nice Article Suresh.. These funds still are the best in 2014-2015. Though Axis was not very popular in 2013 but you even considered it at that time. Though the annualized returns must have changed in last 1 year

  • balaji

    Hi suresh !!!

    THANKS for the valuable info..

    i am planning to invest around Rs. 7000 per month in elss. would it be advisable by investing in 2 or 3 different funds? or its expensive because of charges charged by AMC.


  • Gopal

    Hi Suresh,

    Thank you for your article and it is quite helpful.

    I’m planning for investing 10K under 80cc for tax benefit. Could you please advice me hw to plan and for hw much tenure i shd be investing to get good benefits. Also, could yopu please adsvice me on the tax deduction on returns under indexation

    Many Thanks,

  • pk

    Suresh – Your analysis is very helpful and gives quick and right information to a lot of taxpayer . Thank You for your help .

    Could you please help me to solve my below query .

    ppf=80c tax saving+tax free returns +15 years +8.75 %return (revised )
    ELSS= 80c tax saving + returns would be taxable on indexation +3 years lock + 9% – 12% return .

    Could you pleae help to understand what is indexation and how its calculated in ELSS .
    Example if we do SIP for Rs1000 and assume fund value is 50k after 3 years from elss .Then how much tax we need to give while withdrawing the fund.

    • Hi, You can refer this article about knowing indexation. Note there is change in taxation, hence this article is yet to be updated.

  • Rishi

    Hi Suresh

    I have been investing in tax saving mutual funds since 2011. My port folio has these funds:
    1) Can Robeco Equity Tax Saver – G
    2) Fidelity Tax Advantage Fund – G
    3) HDFC Tax saver – G
    4) ICICI Pru. Tax – G

    For 2014 I would like to invest ~ 25K in ELSS. Should I invest in existing funds or choose others ? Should I go for SIP from next year?
    Please suggest.


    HI Sir,
    U have excellent knowledge of MFs. Kindly guide me looking at my present & future SIP,


    1) Want to start BNP Long Term Equity rs. 2500 SIP ELSS
    2) Want to start AXIS Long Term Equity rs. 2500 SIP ELSS

    5) DSP BR TOP-100 FUND RS. 2000 SIP SINCE 2013





    • Good Funds Asif. However take out Franklin India flexi cap fund and consider better funds like Reliance Equity Opps funds (which is also diversified fund). Also regd tax saving funds, remove DSP BR Tax saver fund. There are better funds like ICICI Pru tax plan etc., I am posting article on this Thursday about top tax saving funds, you can review them.

      • SAYED ASIF

        Thank u Sir for replying my email.

        Sir could u please advise me on fresh sip, which am going to start. I have specified in my previous email.


        Waiting for ur reply.

        Thanking u once again.


  • sadhana


    also, i find that the same fund is availble under direct plan. eg SUNDARAM TAX SAVER (G) & SUNDARAM TAX SAVER – DIRECT PLAN (G)

    Iknow the difference between dividend and growth plans. but dont know what is direct plan. please shed some light.

  • sadhana

    Hi Suresh,

    Thanks a lot for your reply on my query regarding new nfo v/s established funds. i was really confused because i felt that i will end up buying more units in NFO than in established funds. your answer cleared the confusion. Still i feel, i should invest in nfo of reputed companies some times 🙂

    now i want to invest in elss to take advantage of enhanced limit of rs 150,000.

    i went through your above list and tried to compare the ratings with’s ratings which are based on crisil criteria i guess. surprisingly i found that a few of the above funds were not ranked there because they were not fulfilling certain criteria of crisil and CAN ROBEKO is ranked as below average

    will you please throw some light on the rankings.



    • Rankings are giving based on consistent performance, AUM and how well they are performing in various market cycles. Pls see my article next week about ELSS funds where you would get more clarify

  • Arav Shreevas


    Can i invest my money in ELSS for more then 3 years to get good return . Which fund are good to invest in ELSS at present time.


  • Venkatesh

    Hi Suresh,

    I required your suggestion to start my 1st time investment in MF.After going through your blog for last one month i have decided to invest in Reliance Tax Saver (ELSS) Fund (G) -1k,ICICI Prudential Tax Plan (G)-1k per month in SIP method.Recently i have contacted distributor also . So now Please tell me can i invest above funds through distributor or any other method would you suggest and also please tell me your opinion about selection of my funds.Thanks ,would be awaiting for your response…..

  • Arav Shreevas

    suresh ji,

    i have invested 40 k lumsum in 15 nov2011 . now its lock in is going to complete. Can you please guide me what i do now. should i continue with this or invest some where else.


  • vyn chary

    sir,thanks fr advice on tax savings matter.sir,my question is after lock in period i.e.,3 years of elss ,is there any tax have to pay. thanks.

  • Rajanandan

    Hi Suresh,

    Can you provide some high performing tax saver mutual funds for investment for 2014-15. Also, your opinion on IDFC Premier Equity, ICICI Focused blue chip and UTI Mid cap funds with Rs. 1000 SIP every month.


    • Good to hear that you want to invest in tax saving mutual funds. You can invest in Can Robecco Tax Saver fund, Franklin India tax shield fund, ICICI Pru tax plan mutual fund. All these are good for 3 to 5 years investment. You can invest them thru SIP to take care of market fluctuations. Regd IDFC Premier, it is good one. ICICI Focussed blue chip and UTI mid cap also good. You can also invest in HDFC Mid cap opps and Franklin india opps fund for higher returns.

  • Elina


    This is Elina ,I am coing under 20%.

    I am intretsed few tax free and which are coming under 80c ULIP plan .

    Please suggest which are the best plans.


  • Kr Kishore

    Hi Suresh,

    Needed a help to understand my action. My ELSS Axis MF investment have given me 100+ % return and will be out of locking period by end of this month. I have invested Rs.60000/- and will be getting around 125000. Question is with the percent of returns would it be wise to take payout and benefit or to continue ?
    Please advise.

  • shalin

    Helo sir,
    I need to know about tax saving plans…

    What should we do,
    Where to invest this year?

    Can you please guide us.
    As i would like to consume all the limit of it so.

  • shalin

    Hello suresh.
    I m planning to take aegon religare term insurance.

    As i m 24 years old; this is the only company that covers me till 75 year of my age.

    so how is this company?
    Could we keep trust on this company?
    i should move to another company? ?

    • Aegon Claim Settlment ratio is low at 83%. Means for every 100 claims received, they are able to close only 83. What happens if we are part of 17 applications when our family claims it. You shoud always check for high settlement ratio companies. LIC, HDFC, ICICI and SBI comes with high settlment ratios.

  • ritU

    Hi Suresh,

    I read your replies, in one post you have mentioned that the returns on ELSS are taxable on indexation. Please clarify, I was under the impression that the returns are tax free provided lock in is of 3 years. I fall in the 20 % Tax bracket and since the deduction limit has increased to 150000, I wanted to save the additional limit in either Tax FD or ELSS. What do you recommend according to my tax bracket?
    If ELSS, i had shortlisted ICICI Pru tax saver and Reliance tax saver fund. Also please suggest websites from where i should evaluate MF’s performance.
    If Bank FD, which ones do you recommend based on the highest interest paid currently??


    • Hi Ritu, ELSS funds offer tax saving u/s 80C. Means whatever you invest you would get eligibility u/s 80C upto Rs 1.5 Lakhs in a financial year. However the returns are taxable under indexation. This is one of the best way where you would pay small amount compared to other ways where you would pay tax based on your individual tax slab.

  • Atul

    Dear Suresh,

    I am a regular viewer of your blog and have started doing SIP based on the suggestions given you. I am already doing investment in ICICI Focussed Blue chip, SBI Emerging Business Fund, ICICI Balanced Fund . Now after increase in Income tax rebate under section 80 c from 1.00 Lakh to 1.50 lakh in want to invest Rs 30,000/- addItional amount left after all me savings under 80 C schemes .

    I am considering taking a term Policy since i dont have any term policy in my portfolio (all are endowement policy), Apart from this i am also considering to invest in ELSS scheme (Reliance Tax Saver Fund) . 

    Please tell which is better option for me to invest this additional of Rs 30,000/- in Insurance Plan (Term Plan) or ELSS (SIP).







    • Atul, Your first preference should be to have adequate insurance. If your current insurance (which u already taken) is not sufficient, you should go for term insurance. Then you can take ELSS schemes. You have not indicated tax bracket. If you are high tax bracket, go for PPF where you can get tax free returns.

      • Atul


        I am presently in 20% tax bracket. All my insurance plan are endowment plan with sum assured of around Approx Rs 12.00 Lakh + Bonus+ loyalty .

        Should i buy Term plan …. or ELSS or PPF.


  • Sameer


    I want to invest Rs 4000/- in an ELSS. Please suggest some good funds that can return high value in the next 3 years.


  • nikhil


    I want to invest in ELSS funds for tax savings, planning to invest 6000 pm; selected following funds pl provide your input for the same:

    1 Reliance Tax saver fund direct(G) 4000

    2. ICICI Pru Tax Mutual fund direct (G) 2000 

    or AXIS long term equity direct (G) 2000.

    Pl suggest whether allcation of amount is  appropriate for funds and its selection. YOur reply would be highly appreciable.




  • Rajdeep

    Hi Suresh,

    I am planning to invest in the below Elss funds . Please tell whether are good at this point of time.

    BNP Paribas tax advantage plan- rs1000

    Axis long term equity fund – rs 1000
    can i proceed with the above?..

  • Dipta Kundu


    I was thinking of investing on  INR 10000 at SBI Premier Liquid Fund for 3 years .Is it better to invest in ELSS via SIP or one time down payment.

    Do you suggest any better option to invest?


  • Swapnil P

    Hello Suresh,

    its Nice article i came across, i am already invested in one of ur 5 recommended ELSS Fund, Can you let me know how many ELSS should be best in portfolio to achive the tax saving.. should i buy one more or increse the amount in SIP for existing?
    & can i split the SIP Duration from Monthly to weekly or Forthmonthly with existing amount?

    • Swapnil, Ideally you can invest in 2-3 ELSS funds max. Don’t make this complicated. Invest thru SIP every month. Monthly, weekly or fornightly may not add much value.

  • Prashant

    Hi Suresh,

    Please suggest I want to invest in below mutual funds for 5+ yrs , Can I avail tax savings on earning on funds other than ELSS funds as well

    Birla Sun Life Long Term Advantage Fund (G) 22
    HDFC Balanced Fund (G) 91
    Reliance Small Cap Fund (G) 19
    Franklin India High Growth Companies Fund (G) 22
    Axis Long Term Equity Fund (G) 23.8 ELSS
    Reliance Tax Saver (ELSS) Fund (G) 38 ELSS

  • Prashant


    I am new into this Please let me know if tax savings on earnings can be only done on ELSS funds or any mutual fund that is kept for 3+ yrs



  • ravindra gadade

    dear suresh sir,

    your articals r very informative and simple. thanks for such good articals. i need ur suggestion regarding my ULIP plan. i had taken bajaj allianz ULIP plan in 2009, invested 30000 per year for 3 yrs (mandatory for continuation of policy). after 3 yrs fund value was much less becoz of lot of deduction which i was not aware before taking ULIP plan. now since market is increasing fund values are returned to 94,000. policy has surrender charges till 5 yrs. it is equity plan and 5 yrs now completed. what should i do? should i exit or should i change plan. if i exit where i can invest money for better returns?

  • Ravi

    Hi Suresh: I'm an NRI & have gone thru all articles – Excellent ones…

    I have following questions
    (1) I missed to claim 'interest paid pre-possesion' for last 5 yrs.. I have paid significant amount of Interest (Rs4 lakh) in 2007, 2008 & claimed possession in 2009. Is there a way I can claim this benefit as I lost significant amt missing to claim this benefit for last 5 yrs?

    (2) I want to contribute Rs1.5 Lakh to get benefit under 80c. Please advise which one is best for NRI – ELSS mutual funds (or) LIC.. I believe options are very limited for NRI's






  • lokesh mahajan

    Dear suresh,

     I want to invest 3000 in elss for 3 years . Suggest me in which fund should I invest

  • Rajdeep

    Hi Suresh, Is it a good pratise if i invest lumpsum in ELSS at the starting of every financial year instead of SIP.

  • Jagan

    Hi Suresh,

    As I am planning to start SIP in ICICI Pru Tax plan.Is there any tax to be paid on mutual fund returns?

    I mean 10(10D) benifits available for mutual fund returns as well?



  • chaitanya

    Hi Suresh,

    According to new budget july2014, is there any TAX to be paid on ELSS returns?

  • Arunkumar

    Hi Suresh,


    I am thinking to invest in ELSS through SIP(say 2,000 pm), I checked with one advisor here and he suggested me to go with DSP-BRTax Saver Fund and PRINCIPAL TAX SAVINGS.

    Whats your suggestion on these two??

    • Arun, if you have invested in such funds in last 3 years for Rs 2,000 per month, your investment value would have been 110,000 and Rs 114,000 respectively. Among, I prefer principal tax savings and ignore other one. I would rather invest in reliance tax saver where if i invest Rs 2,000 in last 3 years, my money would have been Rs 125,000. Returns is one of all criteria. Ratings, consistent performence needs to be considered. my suggestion is to invest in principal tax saving and reliance tax saver. 

  • Selva

    Hi Suresh, Nice article. I am planning to invest in Canara Robeco Equity Tax Saver for 2014-1015 . Please let me know your thoughts on this since its recent performance is not upto the mark. But long term track record is good.

    • Caneral Robecco tax saver fund has given 18% annualised returns in last 5 years and 40% returns in last 1 year. It is good fund. Looks you mis understood. 

  • dewanshu


    i want to start a sip with short term benefits,may be 5 years or more.which sip fund should you suggest to invest into?

    thanking you!

  • Sanchita

    Hi Sureh,

    Can u please advice me Best Tax saving Mutual fund plan which will give me good returns, lock in period should be  from 3 – 5 years I can invest 2,000 to 3,000 per month.



  • Shah

    Hi Suresh
    Five ELSS Funds returns data is not correct. Please look at these links:

    • Shah, The data is correct. I rechecked since you expressed a doubt. Also you posted another two links which does not talk about these top 5 funds at all, hence there is nothing to verify from such links and I have deleted them.

  • Shobana

    Hi Suresh,

    Thanks for your valuable information. Could you please let me know how much time (minimum) i need to wait to achieve best returns from above mentioned tax saving funds apart from lock-in period of 3 years..

    • Hi Shobana, These are good for 3 to 5 year investment period. If you are able to get 13%-15% annualised returns in 5 years, you should book profits and come out. 

      • Shobana

        Hi Suresh,

        Thanks for your clarification. I understand that I can book profit whenever i earn 13%-15% annualized returns, probably this happens in 3-5 years. Please guide me, what i need to do if the time period crosses 5 years, but dont get expected returns?

        And as of now, i can see Axis LT Equity Fund(G), ICICI Pru Tax Plan-Reg(G), Franklin India TaxShield(G) are performing well compared to Canara Robecco and BNP Paribas. Please share your opinion whether these 2 funds will come up in future?

        • Shobana, It depends. If your ELSS fund is good and due to market conditions the returns are not that good, you can stay invested. You can check with me or any other financial advisor and take opinion in case you are not getting any good returns, but want to take view before exit.

  • Vikas

    Hi Suresh Sir,
    Sir I m looking for long term investment & also tax saving . Plz tell me which option is better between ppf and elss fund.

    • Vikas, Both have their own positives and negatives. PPF-Good for retirement planning + tax savings + Tax free returns + 15 years period + 8.5% returns. Otherside ELSS MF’s-Good for tax saving + 3 year lock-in period + 9% to 12% returns + returns would be taxable based on indexation. If we compare both, ELSS ranks high as post tax returns would be more than 10% whereas PPF gives only 8.5%. However you should choose good ELSS funds.

  • Vikas

    Hi Suresh Sir,
    Sir what is ur opinion about quantum tax saving fund. Is it right fund to invest?

    • Vikas, This ELSS fund formed just 2-3 years back. This is not yet ranked by Crisil. Investors have invested for just Rs 12 Crores. Anything less than Rs 100 Crores AUM, I would not feel comfortable even though the performance is good. There are better ELSS funds to invest. 

  • seetharaman

    Dear Suresh  Thanks for the informative blog as always… I am expecting retirement funds from abroad which will amount to around 40 lakhs.  I am 48 years old and I would appreciate if you could suggest any sound investment options where I can park this sum without paying much tax on returns and get good steady returns?  Thanks in advance for your advise

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