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  • List of top 10 best tax saving mutual funds to invest in India in 2020-21?

    Looking out for the best tax saving mutual funds for investing in 2020-21? Confused which is the best choice? On this page, check out financial advice from our ISC epxerts here.

    Mutual funds refers the collection of money from various investors and that money is invested in many securities like stocks etc. I want to know the top 10 best tax saving mutual fund to invest in India. Please share how I can invest on them and why they are the good choice to invest in 2020-21?
  • Answers

    3 Answers found.
  • The following are considered to be the best choice for investing in 2020-21;
    1. Axis Long Term Equity Fund: This fund will invest in a quality business with a long term approach. stock selection for investment is made by studying the fundamentals of the business and analyse the growth potential.
    2. Mirae Asset Tax Saver Fund: This fund invested in strong growth companies at a reasonable price across the market. They take investment decisions on the complete analysis of the basics of the business and the trend in the line.
    3. Invesco India Tax Plan: This fund invests in companies growing their businesses on a profitable and sustainable basis. This will invest in companies where the stock rates are considered to be reasonable.
    4. Aditya Birla Sun Life Tax Relief 96: This is one fund which uses both bottom-up and top-down approaches for stock selection.
    5. DSP Tax Saver: This fund tries to investing in established and emerging businesses. It will monitor constantly the prospects of the business and price targets before going for investment.
    6. Kotak Tax Saver: This funs will invest in companies with a strong financial record. The reputation of the management is also considered They select companies which are less susceptible to recession.
    7. ICICI Prudential Long Term Equity Fund: The stocks will be selected keeping long term investment in mind. A value-based approach is applied for selecting the shares.
    8. Motilal Oswal Long Term Equity: This fund selects companies which are having a diversified business. They go for less number of stock from different companies.
    9. Tata India Tax Savings: They do fundamental research in selecting the companies for investment. They take corporate governance also into account for investment.
    10. Nippon India Tax Saver: They go for investment in high growth prospectus companies and they for investment for a period of 2 to 3 years.

    always confident

  • Before we go to the list of top performing tax saving mutual fund schemes of various mutual fund houses, let us briefly see what are these funds and what they do with investor's money. Tax saving mutual funds (also known as Equity Linked Savings Scheme (ELSS)) which invest in equity and equity related instruments and have a potential of providing good gains to the investor if the equity market rises. It is very important to understand that they can give a good return only in case of rise in share market and otherwise they will also remain stagnant and their net sat value (NAV) will remain depressed which is a setback for the investor. Govt had long back announced some tax benefits on these investments and the amount invested in this channel is tax exempted under section 80(C) along with some other allowed investments to a overall total maximum limit of 150000. That was an attractive thing that made many people to go for it as it provided tax relief as well as a potential for gain in the rising equity market.

    Many Mutual Fund companies launched these products for the investment of the people and there are so many of them in the offer either as a fresh scheme or available in market to be bought as per the prevailing market price. In a rising equity market they can easily provide a return of more than 15% which is quite lucrative seeing the decrease in interest in bank FDs and other such deposits. These schemes have a lock in period of 3 years and one cannot sell them before that and generally people keep them for long time for realising good growth.

    Based on the past performance some of the good schemes are as follows -
    1. Reliance Tax Saver Fund
    2. DSP BlackRock Tax Saver Fund
    3. Axis Long Term Equity Fund
    4. Aditya Birla Sun Life Tax Relief 96
    5. SBI Magnum Taxgain Scheme
    6. ICICI Prudential Long Term Equity Fund (Tax Saving)
    7. Quant Tax Plan Fund.
    8. Canara Robeco Equity.
    9. Mirae Asset Tax Saver Fund.
    10. BOI AXA Tax Advantage Fund.
    11. JM Tax Gain Fund.
    12. Kotak Tax Saver Fund.
    13. DSP Tax Saver Fund.
    14. Tata India Tax Savings Fund.

    There are many others also but the above are the top rated ones. Please note that due to the fluctuations in the profits of various industries due to changing business scenarios the share prices of some companies do not rise even in a rising market and then what happens is that the mutual funds which have heavily invested in those companies suffer and are forced to switch their corpus to better ones and that is a primary reason of variance in the performance of different mutual fund schemes. That is the concern and in any prospectus of mutual fund marketing it is clearly mentioned that the past performance is not the indicative of future growth. Which simply means that one should be prudent in selecting a particular fund and should go if possible through the portfolio of the scheme and check where the fund is investing. Of course, that is a specialised work but will definitely help in choosing a better one.

    Knowledge is power.

  • Best ELSS funds are equally based mutual funds allowing as an investor to save taxes under section 80C of the IT act. They are also referred to as tax saving mutual funds with the provision of section 80C schemes the investors can claim deduction of up to Rs 1.5 lakh a year by parking their money in ELSS mutual funds where the investors get both the benifits- wealth accumulation and tax savings. These funds have the special features of lock in period of three years considering the same as the minimum tenure.
    However, one needs to understand the following facts prior to selection of the same -
    1) Fund Returns- It should offer the investors a consistent return over the years barring a few where the returns may be disappointing.
    2) You will have to analyse the fund history for an appreciable period say five to ten years.
    3) There is an element known as expense ratio depicting how much of the investment of the investors is parked for managing the fund. The lower the expense ratio, the better.
    4) The investors should think in terms of sharpe ratio. The funds having a higher sharpe ratio can offer higher returns in the event of taking risk in the selection of funds.The funds having a higher sharper ratio can offer higher returns in the event of taking risk in the selection of funds.
    The following table would help the investors in the selection of ELSS funds for the better growth of your portfolio.
    Name of the schemes. Average Returns in five year in terms of %
    1) DSP tax saver fund 7.21
    2) Axis long equity fund growth. 7.10
    3) Aditya Birla Sun Life 6.54
    4) ICICI Prudential Long Term tax saving 5.06
    5) Canara Robeco Tax Saver growth. 7.78
    6) SBI long term equity scheme 3.79
    7) VTI long term equity fund. 5.17
    8) Kotak tax saver fund. 6.11
    9) Tata India Tax Saving 5.97
    10) Mirrae Asset Tax Saver Fund 6.95

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