Best tax-saving funds to invest in right now

In short:

  • DSP BlackRock Tax Saver
  • Birla Sun Life Tax Plan
  • Axis Long Term Equity

At length:

Time is running out when it comes to investing in ELSS funds to save taxes for the current financial year–FY2016-17. The last date to invest for this financial year is 31st March. You can invest up to ₹1.5 lakh under Section 80C to save tax.

ELSS funds are tax-saving mutual funds that invest in the stock market. ELSS funds have the lowest lock-in period among all tax-saving investments. They tend to deliver higher returns over the long run as well. Plus, gains from ELSS fund investments are completely tax-free for the investor.

If you have figured out how much you need to invest in ELSS funds to save tax, pick from the following three options.

  • DSP BlackRock Tax Saver – An average-risk tax-saving mutual fund that has given 24.32% returns over the past 3 years
  • Birla Sun Life Tax Plan – A below average-risk tax-saving mutual fund that has given 22.08% returns over the past 3 years
  • Axis Long Term Equity – A low-risk tax-saving mutual fund that has given 21.82% returns over the past 3 years

You can invest in any of these tax-saving mutual funds directly from the company’s website or through platforms like Cleartax or Scripbox or FundsIndia.

Best tax-saving mutual funds for FY2016-17
ELSS fund Risk grade 3-year returns 5-year returns
DSP BlackRock Tax Saver Average 24.32% 20.50%
Axis Long Term Equity Low 21.82% 21.72%
Birla Sun Life Tax Plan Below-average 22.08% 19.00%
As on 6 March 2017 | Source: Value Research
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