Best Income Tax Saving Mutual Funds

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• Hi Pankaj,

  I am planning to go for SBI magnum tax gain and HDFC tax saver with 25K each. Can I join these plans from any of the banks? Do I want to pay any entry load for doing like this?

  Also taking the dividend yearly or cumulating will be the best option?

  Waiting for your reply.

  Thanks & Best Regards,
  Remya

  • @Remya
    You can apply directly to SBI and HDFC mutual fund. There is no entry load for applying in mutual funds.
    Read thess articles for more information: http://www.pankajbatra.com/finance/mutual-fund-investment-with-zero-entry-load/ and http://www.pankajbatra.com/finance/best-way-to-apply-in-sip/
    Growth option is better than dividend.

• Thanks for your advice

  I would like to know should one considered NAV in mind before investing say like if i am investing 10000 in tax saving MF so should i look for higher nav funds or Nav which starts with zero .could you please suggest me on it and which one gonna give me higher returns .

  2 ) My second question is apart from ElSS fund in which MF should i invest as i am planning to invest 10000 and expecting some good returns after 1 or 2 years

  Regards
  Rajesh

  • @Rajesh
    Its the past performance of the fund thats important and not the NAV. You will see a good fund like Birla 96 tax saving scheme dividend has a low NAV as its in dividend option but its one of the best tax saver funds. Ultimately the percent return matters. You might be able to buy 1000 units of a fund whose NAV is 10 Rs and only 100 for a fund with NAV 100. If fund of NAV 100, goes up to 120 after one year thats 20% return and your total money will be 12000, whereas other fund might reach to NAV and with total value 11000. So by this example, it will be clear that even if the NAV is higher, you can have more return for the invested amount.
    So my suggestion is go with funds which have proved themselves in past, no matter whats the NAV.
    Apart from tax saver, if you want to invest in other MF for 1-2 years, It would be best to go with Balanced or MIP funds. As investment period is not long, there can be risk in investing into pure equity based funds as after one year, they might be at a lower price that what they are currently.

• Hi Pankaj,
  An open-ended equity linked
  savings scheme with a lock-in period of 3 years does it mean we can redempt our investment any tym after say at least 6months or after 3 yrs...
  plz say me difference between open ended and close ended

  • @Asha
    Open-ended scheme means that mutual fund remains open for buying anytime.
    close-ended funds allows application only for a fixed amount of time and you cannot buy them after the fund is closed for buying.
    Lock-in period of 3 years means that it cannot be sold before 3 years of purchase (not even by paying exit load etc).
    There is no exit load if you redeem after 3 years on ELSS plans.

• will we hv to pay exit load for a open ended elss for 3 yrs if we exit or redempt it after say 1 yr??or we wil hv to pay exit load for an open ended elss if we redmpt after 3 yrs???or in both??

• I have 1 lac rupees to invest and i know sip is better than to pay lumpsum but i have no other option than to invest this money in lumpsum and i have decised to invest in RELIANCE DIVERSISFIED POWER- GROWTH, please advise whether my decesion is correct and i want to which mutual fund gives better return year after year as per your knowledge.

  Thanks
  AMOL

  • @Amol
    I won't suggest you to for a thematic fund like reliance diversified power. It only invest in power generation companies.
    It will be better if you invest in diversified funds like HDFC Top 200 Fund, Birla Sunlife Frontline equity fund, DSP Backrock Top 100 fund,
    Sundaram S.M.I.L.E Fund, Sundaram Select Midcap or ICICI Pru Discovery Fund.

    • i will like to correct you Pankaj, just dont go by the name "reliance diversified power"
      it has a diversified portfolio and is not just power generation companies
      here are couple of scrips they have in their portfolio based on weightage:

      Torrent Power Utilities 386.19 6.66
      Cummins Engineering 265.17 4.57
      ICICI Bank Banking/Finance 259.47 4.47
      Reliance Infra Utilities 258.08 4.45
      Jindal Steel Metals & Mining 228.87 3.95
      Tata Power Utilities 215.57 3.72
      Jaiprakash Asso Cement 210.36 3.63
      ONGC Oil & Gas 199.21 3.43
      PTC India Services 185.21 3.19
      Siemens Telecom 161.52 2.78

      i highly recommend this fund as i have my own experiences with it.

      • @Romel
        Thanks for pointing it out.
        However, as per Reliance mutual fund website link : http://www.reliancemutual.com/OurSchemes/Content.aspx?ArticleID=BC445C1C-B80A-45D6-862A-21D1D137538A
        It says, Investment Objective - The primary investment objective of the scheme is to seek to generate continuous return by actively investing in equity and equity related or fixed income securities of Power and other associated companies.

• Is UTI Tax Saving Mutual Funds, is good to invest pleas suggest

  • @Rajesh
    There are better funds available like Sundaram BNP Paribas Taxsaver, SBI Magnum Tax Gain, Franklin India Taxshield and HDFC Tax saver

• Hi Pankaj

  Thanks for the reply
  As per your suggestion i took birla tax 96 plan , but now i want to invest 10000 more for tax saving . i know i go on asking same question every time but still i would like your expert advice for my investment
  Among SBI Magnum Tax Gain, Franklin India Taxshield and HDFC Tax saver which fund you would prefer

  • @Rajesh
    Please go for HDFC Tax saver.

• How about ICICI Pru Tax Plan (G)
  is it good fund

  • @Rajesh
    Yes, ICICI Pru Tax plan is also a very good fund.

• among birla tax relief-96-, hdfc tax saver fund, sundarmabnp paribas tax saver, sbi magnum tax gain-96 which is better?also which is best growth or dividend option?

  • @Vinay
    Birla Tax relief and HDFC tax saver funds are better in out of these and go for Growth option.

• is online purchase is safe

  • @Rajesh,
    Yes, online purchase is quite safe, just check that you are on right website.