ELSS - What do you need to know about ELSS?

Equity linked saving schemes are a kind of mutual funds which gives tax benefit and has certain period of lock-in period. Unlike the other Tax saving instruments this has only 3 years of lock-in period. Since it is invested directed into equity market it has higher risk and has the potential of higher returns.
This is deductable under the Section 80c of Income Tax Act. An investment up to Rs. 100000/- is deductable. The main advantage of ELSS is its short lock-in period and potential high returns.

Advantages of ELSS over other Investments

• A small amount as low as Rs. 500 can be invested every month through SIP (Systematic Investment Plan).
• It has got the shortest lock-in period and highest returns capacity.
• Investors can opt for dividend payout option and get benefits even during the lock-in period.
• It provides on an average more than 20% annual compounded returns compared to 8% to 12% of other instruments.
• Systematic Investment Plan gives the benefit of Average value pricing for the Customers in the highly volatile market.

Choosing the Right Fund
How do you select the right fund for you when are more than 100 fund houses and variety of the funds? Before selecting any fund do your own research. Check the past returns of the fund before investing. Invest in a fund which has an excellent track record in the past 3-5 years. Never be fooled by the short term returns of any fund.

Please find the Top funds which gave the best returns in the past 5 years.

Fund Percentage Returns
Magnum Taxgain 32.26
Sundaram BNP Paribas Taxsaver 27.91
HDFC Taxsaver 24.39
Canara Robeco Equity Tax Saver 24
ICICI Prudential Tax Plan 22.07
Taurus Tax Shield 20.29
Sahara Tax Gain 20.25
Franklin India Taxshield 19.95
Birla Sun Life Tax Plan 18.45
HDFC LT Advantage 18.11
Franklin India Index Tax 17.83
Principal Personal Tax Saver 16.65
Principal Tax Savings 15.53
Birla Sun Life Tax Relief 96 14.1
Tata Tax Saving 13.86
UTI Equity Tax Savings 13.14
Baroda Pioneer ELSS 96 12.42
Escorts Tax Plan 11.38
ING Tax Savings 11.1


Courtesy : Value Research