Under Section 80C of the Income Tax Act, taxpayers can save a sizable chunk on tax, depending on what they invest in. As per the provisions laid out in this section, individuals can avail of tax deductions up to Rs. 1.5 lakhs by investing in a range of tax saving or investment options.
Features of ELSS Mutual Funds
ELSS Mutual Funds come with a number of attractive features, making it a wise option to invest in:
- Low lock-in period of 3 years, which is considerably less than any other investment option under Section 80C.
- Investors can avail of tax deduction up to Rs. 1.5 lakhs under Section 80C
- Any gains earned through ELSS Mutual Funds are exempt from tax
- Offers investors high earning potential by exposing them to equity markets
- Withdrawals made from ELSS Mutual Funds are also exempt from tax
- Investors have the opportunity to earn dividends during the lock-in period
- Individuals can invest in ELSS Mutual Funds with as little as Rs. 500, with no maximum limit
Top ELSS Mutual Funds In 2016
Individuals looking to avail of tax benefits under Section 80C would do well to invest in ELSS Mutual Funds. Listed below are some of the best ELSS funds of 2016, which consistently offer low risk and high returns:
- Franklin India Taxshield
The Franklin India Taxshield is one of the most consistent ELSS funds in the market, besides being one of the oldest. These funds offer investors decent returns even during low market phases, with returns hovering around the 25 percent mark. Individuals who are conservative by nature will find this fund extremely suitable, due to its penchant for low risk coupled with fairly high gains.
- Axis Long Term Equity Fund
The Axis Long Term Equity Fund has been one of the top performing ELSS Mutual Funds over the last five years, offering investors consistent returns of approximately 19 per cent. This fund is suitable for conservative investors as well with its low risk profile and allocation in both large-cap and mid-cap stocks.
- ICICI Pru LTE Fund
The ICICI Pru LTE Fund has been a consistent performer among ELSS funds over the last decade and a half. While the fund mainly has allocations in large-cap stocks, it offers investors the opportunity to acquire high returns from their initial investment. For those investors who are not averse to taking risks, and who want to see their money grow at a rapid pace while also saving on tax, this ELSS Mutual Fund is certainly one of the best investment options in the market at the moment.
