income tax
Published on 18 August 2025
Maximize Tax Deductions: Understanding ELSS Funds and Top Picks
ELSS Funds: Top Tax-Saving Mutual Funds for FY 2024-25
With the ITR filing deadline for FY 2024-25 extended to September 15, 2025 (as notified by the CBDT), taxpayers still have time to optimize their deductions. One of the most popular options is investing in Equity-Linked Savings Schemes (ELSS)—a tax-efficient and growth-oriented mutual fund category.
What is an ELSS Fund?
- Equity-based mutual fund: Minimum 80% of assets are invested in equities/equity-related instruments.
- Tax savings under Section 80C: Up to ₹1.5 lakh deduction (available only in the old regime).
- Shortest lock-in: Just 3 years—versus 5–15 years for most other Section 80C investments.
- Wealth-building potential: Returns are market-linked and may outperform traditional fixed-income options over the long run.
Top 5 ELSS Funds (as of August 13, 2025)
| Fund Name | 3-Year Return | 5-Year Return | NAV (Direct) | AUM (₹ Crore) |
|---|---|---|---|---|
| Quant ELSS Tax Saver Fund | 28.82% | 28.82% | ₹399.43 | 11,504.90 |
| Motilal Oswal ELSS Tax Saver Fund | 25.61% | 26.80% | ₹57.81 | 4,285.51 |
| SBI ELSS Tax Saver Fund | 24.54% | 25.52% | ₹466.13 | 30,225.44 |
| HDFC ELSS Tax Saver Fund | 22.08% | 25.32% | ₹1,509.65 | 16,533.68 |
| Mirae Asset ELSS Tax Saver Fund | 16.83% | 22.37% | ₹54.51 | Not stated |
Section 80C Deduction Rules
- Available only in the old regime.
- Maximum deduction: ₹1.5 lakh per year (for individuals and HUFs).
- Other eligible investments include: PPF, EPF, NSC, NPS, life insurance premiums, tax-saving FDs, etc.
Key Considerations Before Investing in ELSS
- Risk profile: Higher risk since investments are largely equity-driven.
- Lock-in: 3 years (no premature withdrawal).
- Returns: Market-dependent, subject to volatility.
- Suitability: Best for investors seeking long-term wealth creation along with tax savings.
FAQs on ELSS
1. Is ELSS tax-deduction available under the new tax regime? No. Section 80C deductions, including ELSS, are only available under the old regime.
2. Can I withdraw before the 3-year lock-in? No. ELSS comes with a mandatory 3-year lock-in.
3. How much tax can I save through ELSS? Up to ₹1.5 lakh can be claimed as deduction, reducing your taxable income. The actual tax saved depends on your tax slab.
4. How to choose the right ELSS fund? Look at returns consistency, fund size, portfolio risk, and past performance. Align with your financial goals and risk appetite.
Final Word
ELSS funds are an attractive way to combine tax savings with wealth creation, provided you’re comfortable with equity risk. For those filing ITR under the old regime this year, allocating part of your Section 80C limit to ELSS may help strike the right balance between short lock-in, high growth potential, and tax efficiency