Save tax with ELSS

Save Tax with ELSS

Worried during tax saving season? Here is the best solution for your tax saving woes which is ELSS!

Equity Linked Savings Scheme is one of the most popular tax saving investment options among other tax saving option under Sec 80C. You might be going through the last minute rush for tax saving around Jan-Feb each year. Most of the people get easily distracted by just looking at ‘tax saving’ tag on investments available in the market and invest in products which don’t add enough value.

We are here to tell you how to avoid the last minute rush along with earning great returns.
Below are a few advantages of ELSS mutual funds:

  • ELSS scheme has the shortest lock-in period among other investment options available under Sec 80C.
  • Most investment options available under SEC 80C are government-backed securities which usually have lower returns. Equity returns have been the most in the long run as compared to PPF, National Savings Certificate, post office schemes, etc.
  • Low charges as compared to insurance schemes where your premium gets diluted into agent commission, management charges and hence get less value for your investments.

Investments in ELSS are available through SIP. If you start a Systematic investment plan in an ELSS, then each of your investments will be locked in for 3 years from the respective investment date. An investment of Rs.12.5k per month can help you save tax up to Rs.15K for the year in which investments are made. This is the best way to avoid the last minute rush during the Jan-Feb month.


Tax benefits under Section 80C

The avoidance of taxes is the only intellectual pursuit that carries any reward.

— John Maynard Keynes

Quite often, we rush to make the least thought-through tax saving investment (the easiest like insurance plan & PPF being the most popular) with a short-term view to save on taxes.

Have you ever wondered if the same investment could also help you build wealth and take you closer to your financial goals? Probably not.

Here’s a cheat-sheet to help you choose the best tax-saving option to utilize your section 80C’s INR 1.5 Lakh tax-deductible limit.

Options available under the section 80C basket:

Tax Saving ProductsLock in periodExpected Returns
Equity Linked Saving Scheme (ELSS) Mutual Funds3 Years 12% - 15%
Public Provident Fund (PPF)15 Years 8.00%
National Savings Certificate5 Years 8.00%
5 Years Tax - Saving Fixed Deposit5 Years 7% - 7.5%
Insurance 10 - 15 Years 4.5 % - 5%


Sagar had started a SIP of INR 12,500/month (INR 1.5L annually) in an ELSS mutual fund – ICICI Prudential Long Term Equity Mutual Fund ten years back.

Over this period, he saved almost INR 4.5 lakhs in yearly taxes while his investment has grown to INR 32 Lakhs! A total gain of INR 21.5 Lakhs in ten years!

What happened there? It’s the power of equity, compounding and a wise tax-saving investment that made all the difference.

Equity as an asset class is by far the most dominant when it comes to building wealth. A classic display of the power of equity was the performance of TCS shares in the past week.

Shares of TCS gained the most this week. Since it got a clean-chit in the controversial racial-discrimination lawsuit filed in the U.S. Digital funds have been the biggest winners along with TCS.

TCS Share Price (22 Nov-30 Nov 2018)

Fund Name TCS (%)
Tata Digital India11.96%
Aditya Birla Sun Life Digital India fund11.70%
Axis Long Term Equity Fund8.44%
Axis Focused 25 Fund7.60%


Stock Market in last week



Tax saving

Top Tax-Saving Funds

Tax season is as certain as sunrise.
You’ll be better off having a hat at all times!

“Request for submission of proof of investments”: This is the email subject I woke up to this morning. I realized that many, just like me, are just so engrossed in the frenzy of daily tasks that we sometimes forget our essentials – like saving tax through 80C deductible investments.

It would be too redundant to list out a comparative table enlisting tax-saving options with their pros/cons and prove how ELSS mutual fund is the best tax-saving avenue in terms of the lowest lock-in period and highest return expectation.

However today, let’s cut to the chase and let me present our top ELSS mutual fund picks for the year 2019 which will not just help you save on taxes, but also help build you some decent wealth.

Fund NameFund Type3Y Returns5Y Returns
IDFC Tax AdvantageAggressive13.9%16.4%
L&T Tax AdvantageAggressive14.5%16.3%
Aditya Birla SL Tax Relief 96Low-Aggressive14.0%19.2%
ICICI Pru LT EquityModerate12.0%16.1%
DSP Tax SaverModerate13.7%17.6%

While these are our top picks for the year, you may choose to invest in the fund that matches your risk-appetite. Remember, the risk reduces as you move from small cap to midcap to large-cap allocations.(Source: Morningstar; data as on 17 Jan 2018; returns are annualized)

While ELSS is the only tax-saving investment option with a lock-in period as low as three years, the equity component has been the largest wealth creator when it comes to asset classes.

While equities work like a gold mine which takes years to mine, but at the end delivers a fortune, it only helps to see what has been moving this mine in the past week.

Nifty Data

Now that you know the necessity of ELSS go ahead and invest through MyWay Wealth.