Best Tax Saving Mutual Funds 2026
Save up to ₹46,800 in tax every year with ELSS funds under Section 80C. The only tax-saving option that also offers equity market returns with just a 3-year lock-in.
Your Tax Savings with ELSS
Max Investment under 80C
₹1,50,000
per financial year
Tax Saved (30% bracket)
₹46,800
including 4% cess
Monthly SIP Needed
₹12,500
to exhaust 80C limit via ELSS
Top Tax Saving ELSS Funds for 2026
Ranked by consistency and long-term performance
Fund names are illustrative. Past performance does not guarantee future results. Always verify current data before investing.
Alpha ELSS Tax Saver Fund - Direct
1Y
24.2%
3Y
19.5%
5Y
17.8%
Premier ELSS Growth Fund - Direct
1Y
22.8%
3Y
18.2%
5Y
16.5%
Tax Shield Equity Fund - Direct
1Y
21.5%
3Y
17.8%
5Y
15.9%
Smart ELSS Tax Planner Fund - Direct
1Y
20.8%
3Y
17.2%
5Y
15.5%
Value ELSS Tax Saving Fund - Direct
1Y
19.5%
3Y
16.8%
5Y
15.1%
Dynamic ELSS Growth Fund - Direct
1Y
18.8%
3Y
16.2%
5Y
14.8%
ELSS vs PPF vs Tax-Saving FD
| Parameter | ELSS | PPF | Tax-Saving FD |
|---|---|---|---|
| Returns | 12-17% (historical) | 7.1% (current) | 6.5-7.5% |
| Lock-in Period | 3 years (shortest) | 15 years | 5 years |
| Risk Level | Moderate-High (market-linked) | Zero (govt. guaranteed) | Zero (bank guaranteed) |
| Tax on Returns | LTCG 12.5% above ₹1.25L | Fully tax-free (EEE) | Taxable at slab rate |
| Section 80C Limit | Up to ₹1.5 lakh | Up to ₹1.5 lakh | Up to ₹1.5 lakh |
| Liquidity | After 3 years per installment | Partial after 7 years | No premature withdrawal |
| Inflation-Beating | Yes (historically) | Marginally | No (post-tax) |
| Best For | Growth-oriented investors | Conservative, long-term | Ultra-conservative investors |
How to Start Tax Saving with ELSS
Start SIP of Rs 12,500/month
This equals Rs 1.5 lakh/year, maximizing your 80C deduction. Start in April for full-year benefit.
Claim Deduction While Filing
Declare your ELSS investment under Section 80C when filing your income tax return.
Wait 3 Years Per Installment
Each SIP installment is locked for 3 years. Your April 2026 SIP unlocks in April 2029.
Stay Invested Beyond Lock-in
After lock-in, keep your money invested for higher returns. No need to redeem at 3 years.
Pro Tip: Start Your ELSS SIP in April
Instead of rushing to invest ₹1.5 lakh in March, start a ₹12,500/month SIP in April itself. You invest throughout the year, benefit from rupee cost averaging, and avoid the last-minute panic that leads to poor investment decisions.
Frequently Asked Questions
Common questions about tax saving mutual funds
What is the maximum tax saving with ELSS?
You can invest up to Rs 1.5 lakh per year in ELSS under Section 80C of the Income Tax Act. In the 30% tax bracket (old regime), this saves you Rs 46,800 (including 4% cess). In the 20% bracket, the saving is Rs 31,200. In the 5% bracket, it is Rs 7,800. Note: This deduction is available only under the old tax regime.
What is the lock-in period for ELSS/tax saving mutual funds?
ELSS has a mandatory lock-in period of 3 years from the date of each investment. If you invest via SIP, each monthly installment has its own 3-year lock-in. This is the shortest lock-in among all Section 80C options (PPF: 15 years, Tax-Saving FD: 5 years, NSC: 5 years).
Should I invest via SIP or lump sum in ELSS?
SIP is recommended for most investors. A monthly SIP of Rs 12,500 (Rs 12,500 x 12 = Rs 1.5 lakh) helps you invest consistently throughout the year and benefit from rupee cost averaging. Lump sum works if you receive a bonus or have a large amount to invest before March 31st. Avoid the common mistake of rushing to invest Rs 1.5 lakh in March.
How are ELSS returns taxed when I redeem?
ELSS gains are treated as Long-Term Capital Gains (LTCG) since the minimum holding period is 3 years. Gains up to Rs 1.25 lakh per year are completely tax-free. Gains above Rs 1.25 lakh are taxed at 12.5%. This is much more favorable than FD interest (taxed at your slab rate) or even PPF returns (while tax-free, PPF has a 15-year lock-in).
Is ELSS still relevant under the new tax regime?
The new tax regime does not allow Section 80C deductions, so ELSS does not provide tax saving benefits under it. However, ELSS is still a good equity investment even without tax benefits, thanks to professional management and historical returns of 12-17%. If you are on the old tax regime, ELSS remains one of the best tax-saving options available.
Save Tax While Building Wealth
Start your ELSS SIP today and save up to ₹46,800 in tax every year while your investments grow at equity market rates.
Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not indicative of future returns. The fund names and data shown above are illustrative examples for educational purposes only. Tax benefits are subject to changes in tax laws. Please consult your tax advisor for personalized advice. | Trustner Asset Services Pvt. Ltd. | ARN-286886