This is the time of year when employees are busy submitting investment certificates to their employers. Essentially, the idea is that investments made during the year are declared to the respective employers and one has to produce the proof of investment so that the employer can deduct TDS (tax deducted at source) accordingly.
In the meantime, there are a number of tax-saving investments one can opt for. These include PPF, NSC and NPS. In the meantime, it is essential to note that most of these tax-saving options are available in the old tax regime and not in the new tax regime. And since the New Tax Regime is the default regime, taxpayers are expected to opt for the old tax regime to be able to claim these tax exemptions.
Moreover, one can also invest in equity funds to save taxes. These tax-saving investment funds are known as equity-linked saving plans (ELSS).
What is ELSS?
Equity Linked Savings Schemes (ELSS) invest at least 80 percent in equities in accordance with the Equity Linked Saving Scheme, 2005, notified by the Ministry of Finance. These mutual funds have a lock-in period of three years (the shortest among all other tax-saving options).
These schemes, as stated above, are eligible for deduction under Sec 80C of the Income Tax Act up to a maximum of ₹1,50,000 in a financial year.
Here we provide an overview of the top 10 schemes based on returns over the past year.
(Source: AMFI; Returns as on December 20, 2024)
As we can see from the table above, the top 10 schemes delivered exceptional returns ranging from 25 to 51 percent per annum. Motilal Oswal ELSS Tax Saver Fund gave 51 percent, while Quantum ELSS Tax Saver Fund gave returns of over 25 percent in the last year.
Other top performing ELSS funds include SBI Long Term Equity Fund, Bank of India ELSS Tax Saver Fund, HSBC ELSS Tax Saver Fund and Baroda BNP Paribas ELSS Tax Saver Fund.
Notably, past returns do not guarantee a scheme’s future returns. In other words, just because a plan has performed exceptionally well in the past does not mean it will continue to perform in the future.
Note: This story is for informational purposes only. Please consult a SEBI registered investment advisor before making any investment related decision.
