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Income tax saving options: Top 3 tax saving mutual funds to buy in January

Income tax saving options: Top 3 tax saving mutual funds to buy in January

The ELSS scheme is an equity-oriented scheme with a mandatory lock-in period of three years. These schemes are very popular when someone is considering income tax aspects as it involves section 80C tax deduction.

 The ELSS funds are comparable to other government savings schemes such as Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY). The ELSS funds are comparable to other government savings schemes such as Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY).

Income tax saving options: It is that time of the year when many investors are looking at last-minute tax-saving options to save some more money. In such cases, Equity Linked Savings Schemes or ELSS funds are the best tax-saving options when it comes to equity mutual funds. The ELSS scheme is an equity-oriented scheme with a mandatory lock-in period of three years. 

These schemes are very popular when someone is considering income tax aspects as it involves section 80C tax deduction. These schemes are comparable to other government savings schemes such as Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), National Savings Certificate (NSC), Fixed Deposits (FD), and Employee Provident Fund (EPF), wherein investments up to Rs 1.5 lakh per year would not be taxed or you may call it as the tax rebate. By investing in ELSS, one can save up to Rs 46,800 a year in taxes. 

ELSS funds are diversified funds, which make investments across all available categories in the MF sector, these include Large Caps, Mid-Caps, and Small Caps by market capitalisation. These funds invest up to 65 per cent of their portfolio in instruments such as shares and can give the investor annual returns of almost 17.48 per cent. One can invest in ELSS funds through monthly SIPs. 

Top tax-savings tools and offered interest rates:

Product Lock-in period  Annual interest rates
ELSS funds 3 years  3Y: 17.48%
5Y: 10.48%
10Y: 14.64% 
National Pension Scheme Till 60 years of the investor, partial withdrawal available after 3 years  3Y: 15.36%
5Y: 10.95% 
Public Provident Fund (PPF) 15 years; Partial withdrawl allowed by 5 & 7 years  7.10% 
Five-year Fixed deposits 5 years  6.25% 
National Savings Account (NSC) 5 years  
 
7.00% 
Sukanya Samriddhi Account 
 
21 years; partial withdrawal available at 18 years  7.6% 
Senior Citizen Savings Scheme (only for investors above 60 years) 
 
5 years 
 
8% 

Let’s take a look at the Tax Saving Mutual Funds for 2023 

1.    Bank of India Tax Advantage Fund - Direct Plan 

As of January 20, 2023, the direct plan of the Bank of India Tax Advantage Fund has given a return of 22.27 per cent for three years, whereas its 5-year returns stood at 12.70 per cent. The fund has 99.82 per cent investment in domestic equities, of which 48.25 per cent is in Large Cap stocks, 18.58 per cent is in Mid Cap stocks, 16 per cent in Small Cap stocks. The fund has 0.08 per cent investment in Debt, of which 0.08 per cent is in Government securities. 

2.    Canara Robeco Equity Tax Saver Fund 

As of January 20, 2023, the direct plan of Canara Robeco Equity Tax Saver Fund has given a return of 19.97 per cent for three years, whereas its 5-year returns stood at 15.12 per cent. The fund has 96.42 per cent investment in domestic equities of which 59.95 per cent is in Large Cap stocks, 14.89 per cent is in Mid Cap stocks, 5.94 per cent in Small Cap stocks. 

3.    DSP Tax Saver Fund 

As of January 20, 2023, the direct plan of DSP Tax Saver Fund has given a return of 18.00 per cent for three years, whereas its 5-year returns stood at 12.43 per cent. The fund has 99.36 per cent investment in domestic equities of which 60.74 per cent is in Large Cap stocks, 17.4 per cent is in Mid Cap stocks, 7.55 per cent in Small Cap stocks. 

Published on: Jan 20, 2023, 2:17 PM IST
Posted by: Basudha Das, Jan 20, 2023, 1:49 PM IST