Is it that time of the year when you need to file your taxes and you are looking for ways to reduce your tax liabilities? Investing in ELSS funds can offer you tax benefits. However, with plenty of ELSS funds available in the Indian market, it can get difficult to find the best ELSS investment. The investment strategies of each fund are unique, so it’s crucial to find the right one as per your needs. This article will brief you about the top 10 ELSS Funds that can be beneficial for you to grow your money significantly over a period of time.
Best 10 ELSS Mutual Fund
If you are looking for the Best ELSS fund recommendations, here is a list of the top 10 ELSS Funds for you to look at
Axis Long Term Equity Fund
It is one of the top 10 ELSS Funds and a great investment option for those looking to save on taxes. This fund offers returns of up to 18% per annum, making it one of the best-performing ELSS funds in the market. The fund has a five-year lock-in period, ideal for long-term investors.
HDFC Tax Saver Fund
HDFC Tax Saver Fund is another top 10 ELSS Fund an equity fund that aims to generate long-term capital appreciation by investing in diversified portfolios, with a minimum investment amount of Rs 500 and a lock-in period of 3 years suited for those looking to increase their net worth over a certain period.
ICICI Prudential Tax Saving Fund
One of India’s top 10 ELSS Fund, the scheme offers the benefits of both equity and tax saving, which makes it an attractive proposition for investors. With a 3-year lock-in period, the fund is offered with a relatively low expense ratio and has performed well over the long term.
SBI Magnum Tax Gain Scheme 1993
The SBI Magnum investment plan is another top 10 ELSS fund will help you maximise returns without bearing comprehensive risk. The system also offers investors the flexibility to choose from different investment options, depending on their risk appetite and investment goals. The minimum investment for this scheme is Rs. 5000, and it offers two other options – Growth or Dividend – with an attractive rate of return.
Birla Sun Life Tax Relief 96
The Birla Sun Life Tax Relief 96 ELSS fund, yet another top 10 ELSS fund, offers investors the opportunity to save up to Rs. 46,800 in taxes every year. The key features of the fund include a minimum investment amount of Rs. 500 only with a 3-year lock-in period.
Kotak Tax saver mutual fund
Kotak tax saver mutual fund is one of the best ELSS investment options for people looking to generate high returns as these funds invest more than 80% of the scheme’s assets in equities. The fund offers a variety of benefits that make it an attractive investment option, including the ability to save on taxes and the potential to earn high returns to override the fear of inflation.
DSP BlackRock Tax Saver Fund
The fund is suitable for investors looking to save taxes and create wealth over the long term. DSP BlackRock Tax Saver Fund is an ELSS fund that is best-known for performing well over the years, with an annualised return of 13.96%. One of the top 10 ELSS funds in India, this fund has also beaten its benchmark, the Nifty 500, by a wide margin over the long term. The fund invests in a diversified portfolio of large-cap stocks and has a 3-year lock-in period.
Franklin India Taxshield
Franklin India Taxshield is one of India’s most popular ELSS funds and is one of the top 10 ELSS funds one can invest in. The fund has a solid track record and has delivered consistent returns. The fund has a low lock-in period of 3 years and is ideal for investors with a medium to high-risk appetite.
Canara Robeco Equity Tax Saver Fund
Being one of the best ELSS funds, it requires investors to focus solely on large-cap and mid-cap funds listed on Indian stock exchanges. The fund is suitable for investors looking to save tax and yield potentially higher returns with regular investing.
IDFC Tax Advantage (ELSS) Fund
With this investment plan, you can get long-term capital appreciation by investing in diversified equity and debt instruments. The scheme offers two options – growth and dividends. There’s no maximum limit on how much money an investor puts into it. You have three years until the lock-in period ends, after which your total invested amount will be matured.

What are ELSS Funds?
ELSS Mutual Fund (Equity Linked Saving Scheme) is an investment tool that allows investors to enjoy the benefits of tax exemption and capital appreciation. These funds are ideal for investors looking for an investment option with high ELSS returns and low risk.
Who Should Invest in Best ELSS Mutual Funds?
As ELSS comprises diversified equity funds that offer tax benefits to investors, ELSS mutual funds are appropriate for investors who can afford to take the risk of an equity-oriented tax savings instrument. They are also ideal for individuals who have a regular income. At the same time, investors who are looking to make long-term investments should also consider investing in top ELSS funds.
How to Evaluate the Best ELSS Mutual Funds
Here’s how you can evaluate the best ELSS mutual funds before making a pick:
Investment Returns and Risk Involved
Investment returns and risks are the two most important deciding factors. They have a direct relationship with the investment. To be specific here, mutual funds that offer high returns are those that come with high risks. Likewise, those that offer low returns come with low risk. Therefore, it’s essential that you analyze your risk appetite and financial goals before making a call.
If you consider yourself an aggressive investor, you can pick a fund having a higher allocation of small-cap or mid-cap stocks. However, if you want a specific rate of return, it’s recommended that you hold your mutual fund investment for at least 7-10 years.
On the other hand, if you are a conservative investor, you can pick the ELSS fund that has investments in Large Cap Stocks that are less risky and stable. However, if your goal is to achieve a specific rate of return, you must hold your mutual fund investment for at least 5-7 years.
Market Cap Composition:
Following the general ELSS fund rule, it requires at least 80% of its investment in equity instruments. However, there is no limitation on the % allocation in a specific equity instrument.
The fund manager decides the allocation as per the market conditions, fund objective, and risk appetite of the investor. So, it’s important to decide the proportion of your investment allocation between large-cap companies, mid-cap companies and small-cap companies.
Expense Ratio:
The expense ratio refers to the fees charged by the mutual fund house for offering its services. These services include management of the mutual fund.
When you are choosing mutual funds, you must keep the expense ratio in mind. A high expense ratio indicates the high expenses that come with the mutual fund. Hence, give expense ratio a good consideration. Opt for a mutual fund that comes with a low expense ratio.
Advantages of Investing in ELSS Funds
Some of the best ELSS Funds with high ELSS returns offer many benefits. Some of the benefits include:

- Tax exemption: ELSS Funds are exempt from taxes. In case of investments up to Rs. 1.5 lac, one is eligible to get tax benefit, which means that your investment will grow faster as you are authorised to save on taxes every year.
- Capital appreciation: ELSS Funds have the potential to generate high ELSS returns through capital appreciation in comparison to bank FDs or PPF income.
- Low risk: ELSS Mutual Funds are considered a low-risk investment option because they are diversified across different asset classes and stocks, assuring high ELSS returns.
Comparison with Other Tax Saving Instruments
While debt and equity funds are very famous, numerous working professionals, are now keen in investing in ELSS (Equity-Linked Saving Scheme) funds for the tax saving benefit. These funds are now rapidly replacing popular tax saving options like PPF, NSC, ULIPs, and tax-saving FDs. Let’s compare it with other tax saving instruments:
More Exposure of Equity:
ELSS mutual funds mostly invest in equity related fund. Except for ELSS funds, no other tax saving tool under 80C provides this high exposure in equity. Therefore, with an ELSS fund, the chances of capital appreciation are more.
A Short Lock-in Period:
Almost all investment cum tax-saving schemes come with a long lock-in period. However, as far as ELSS is concerned, it has a lock-in period of 3 years – the shortest lock-in period.
ELSS is More Flexible:
ELSS mutual funds offer better flexibility than other investment options. While other investment options do not allow you to shift your AMC in case you are not satisfied with the fund’s performance, ELSS mutual fund allows you to do so.
Investment in ELSS is Quick and Easy:
Much to the convenience of many investors, AMCs offering ELSS mutual funds operate through an online portal. This means most of the transactions or investments can be done online. As for other tax-saving instruments, they involve complex paperwork.
Things Investors Should Consider Before Investing in ELSS Funds
Don’t Add Excessive ELSS funds in the Portfolio
Fund selection has to be given consideration. It’s not a wise call to only focus on tax-saving and undermine the affect on the investment portfolio. Like most investors allocate their money in a single type of fund, it can create overexposure. That’s why it’s important to create diversity when you are investing in ELSS mutual fund.
Level of Risk:
ELSS primarily invests in equity funds. However, that does not make it a risky investment. The risk can be adjusted by investing in funds that come with different risk levels. Thus, ensure that you select investment schemes depending on your financial goals and risk appetite.
Taxability of ELSS Mutual Fund:
Investments made in an ELSS fund are subject to tax benefits under Section 80C of the ITA 1961. There is no maximum cap to the amount that can be invested, however, a maximum of Rs. 1.5 lakh is applicable for a tax deduction as per the Income Tax rules.
In addition to this, not all profit earned in ELSS investments are tax-free. The gains are considered as long term capital gains (LTCG). Any gains in excess of Rs. 1 Lakh is taxed at the rate of 10%.
Conclusion
These were some of the best ELSS funds to invest in India in 2023. However, remember to opt for an ELSS fund that aligns with your financial goals and risk profile. Withdrawing prematurely from an ELSS fund can lead to penalties, so make sure you understand all the terms and conditions of the ELSS fund before investing.
FAQs on Best ELSS Funds:
One of the best ELSS is the Canara Robeco Equity Tax Saver Fund as it has consistent and high ELSS returns.
Some of the best ELSS funds to invest in 2023 are Axis Long Term Equity Fund, Invesco India Tax Plan Fund, and Canara Robeco Equity Tax Saver.
ELSS Funds are better to invest in since they give high returns within a shorter period than PPF.
You can check your ELSS Funds on your specific fund house’s official portal.
You may invest in 2 or 3 ELSS Funds at a time to build an ideal portfolio.
To invest in ELSS mutual funds online, you have to first choose an AMC (Asset Management Company). Once that is done, you have to register on the website. Once the registration is successful, you can begin by investing in ELSS mutual funds.
Your ELSS fund returns can be checked on the AMC portal you have chosen
You can invest in ELSS mutual funds through a bank in case you don’t have a Demat account. You can also invest through the AMC’s website and a registered mutual fund advisor.
How to invest in ELSS mutual funds through SIP online?
Investment in ELSS mutual funds through SIP can be done through the AMC’s portal.
Investing lump-sum in mutual funds can be done through the AMC portal or though your Demat account.
No, you cannot redeem ELSS units before the 3 year lock-in period.
Short-term mutual funds are available in dividend and growth options. You can decide which type to choose on the basis of your financial goals. Investment in mutual fund can be made through AMC’s investment portal.
Axis long-term equity fund and HDFC tax saver fund are two of the best performing ELSS mutual funds in India