Save Tax Like a Pro: Best Mutual Fund Options for 2023-24

In India, tax saving is a crucial aspect of financial planning, and equity-linked savings schemes (ELSS) have emerged as a popular choice for achieving this goal. ELSS mutual funds offer the dual benefit of tax savings under Section 80C of the Income Tax Act and the potential for long-term wealth creation through equity investments.

Selecting the right ELSS mutual fund can be a daunting task, given the plethora of options available. This blog aims to simplify the process by providing a comprehensive guide to the top tax saving mutual funds in India.

Understanding ELSS Mutual Funds

ELSS mutual funds are diversified equity funds that invest at least 80% of their corpus in equity and equity-related instruments. This investment strategy offers the potential for higher returns compared to traditional tax saving instruments like fixed deposits and Public Provident Fund (PPF). However, it is important to note that ELSS funds are subject to market fluctuations, and their returns can vary significantly over time.

Best ELSS Mutual Funds in India

ELSS Fund3-Year Returns5-Year Returns
Quant Tax Plan29.45%19.19%
Bandhan ELSS Tax Saver Fund27.81%19.33%
SBI Long Term Equity Fund27.26%18.08%
Parag Parikh Tax Saver Fund26.77%17.71%
Mahindra Manulife ELSS Tax Saver Fund26.63%17.58%
Bank of India Tax Advantage Fund26.57%17.50%
DSP Tax Saver Fund26.52%17.44%
PGIM India ELSS Tax Saver Fund26.44%17.38%
Kotak ELSS Tax Saver Fund26.37%17.32%
Mirae Asset Tax Saver Fund26.32%17.26%

Benefits of ELSS Mutual Funds

ELSS mutual funds offer a range of benefits to investors, including:

  • Tax Savings: ELSS funds qualify for tax deductions under Section 80C of the Income Tax Act, allowing investors to reduce their taxable income.
  • Long-Term Wealth Creation: Equity investments have the potential to generate higher returns over the long term, making ELSS funds an attractive option for wealth creation.
  • Diversification: ELSS funds invest in a diversified portfolio of stocks, reducing the overall risk associated with individual stock investments.
  • Professional Management: ELSS funds are managed by experienced fund managers who have the expertise to make informed investment decisions.

Factors to Consider When Choosing an ELSS Mutual Fund

Before investing in an ELSS mutual fund, it is essential to consider the following factors:

Selecting an Equity Linked Savings Scheme (ELSS) mutual fund requires careful consideration to align with your financial goals and risk tolerance. Here are key factors to weigh when making this decision:

  1. Performance Track Record: Assess the fund’s historical performance over various market cycles. Look for consistent returns and how it compares to benchmark indices.
  2. Fund Manager Expertise: Evaluate the experience and track record of the fund manager. A seasoned manager with a successful history can contribute to better fund performance.
  3. Risk Tolerance: ELSS funds primarily invest in equities, which carry market risk. Assess your risk tolerance and choose a fund that aligns with your comfort level.
  4. Lock-in Period: ELSS funds have a mandatory lock-in period of three years. Ensure that the lock-in duration aligns with your investment horizon and liquidity needs.
  5. Expense Ratio: Consider the expense ratio, as lower expenses can enhance your returns. However, a slightly higher expense ratio may be justified if the fund consistently outperforms its peers.
  6. Portfolio Composition: Examine the fund’s portfolio holdings to understand where your money will be invested. Diversification across sectors and stocks can mitigate risks.
  7. Dividend or Growth Option: ELSS funds offer both dividend and growth options. The dividend option can provide periodic income, but growth reinvests returns for compounded growth. Choose based on your income needs.
  8. Exit Load: Be aware of exit loads, which are charges for redeeming units before the completion of the lock-in period. Choose funds with minimal or no exit loads.
  9. Fund Size: A larger fund size can indicate stability, but excessively large funds might find it challenging to manoeuvre in certain market conditions.
  10. Market Capitalization Bias: ELSS funds may focus on large-cap, mid-cap, or small-cap stocks. Ensure that the fund’s market capitalization bias aligns with your investment objectives.


ELSS mutual funds offer a compelling combination of tax benefits and long-term wealth creation potential. By carefully considering your investment goals, risk tolerance, and financial situation, you can select the right ELSS mutual fund to meet your tax saving and wealth creation objectives. Remember to consult a financial advisor for personalized guidance.


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Amit Arora

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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