Best Mutual Fund to Invest for Tax Saving

Tax Savings with Mutual Funds

Tax is probably one of the most feared words today. Most of us explore the depth of investment options that are there for tax-saving – Public Provident Fund and National Savings Certificate being the old horses in the race. There are other options also available such as Equity Linked Saving Schemes, Life Insurance etc. which provide tax exemption under Section 80C of the Income Tax Act, 1961.


However, the choice of investment should be guided by several features of the product such as its suitability, the prevailing tax exemption, returns and lock in period of the instruments. The following table helps understand the different tax saving instruments on the same platform.



Lock-in Period 15 years# 5/10 years 5 years 5 years 3 years
Returns* 7.90% 7.90% 6% to 7.5% Market Linked Market Linked
Minimum Investment Rs 500 Rs 100 Rs 1,000 Depends on Premium  Rs 500
Risk Rating Low  Low  Low to Moderate Moderate to High Moderate to High



* This is for illustration purposes only. Your investment decision will depend on your own risk appetite and time horizon. Recipient of this information should understand that statements made herein regarding future prospects may not be realized. Investments in mutual funds and secondary markets inherently involve risks and recipients should consult their legal, tax and financial advisors before investing. Returns for PPF and NSC are approximated for ease and are subject to change basis policy changes if any. The rate of return may vary for each bank.


#Premature part withdrawal facility available after 7th financial year


As is evident, different investment avenues offer different benefits.


While there are instruments like Public Provident Fund, National Savings Certificate and Tax Saving FDs, the returns on these instruments could lose out in the long term against inflation. Equity Linked Saving Schemes on the other side is a mutual fund that offers the dual benefits of tax saving and capital gains. The 3 year lock-in period of ELSS is the least as compared to other investment options and as ELSS invests in the equity market, the investor stands to gain from the growth potential of equities in the long term.


When compared to other options available for tax saving, ELSS could be a good option to save tax as well as grow your investment in the long term. An Investor Education & Awareness Initiative


Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. Investments in MFs and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully





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