Best Income Tax Saving Mutual Funds

I compared ELSS (Equity Linked Saving Scheme) mutual funds on the basis of their AUM (assets under management) size and past performance in 6 months, 1 year, 2 years and 3 years.

Finally following funds were found to be good.

Canara Robeco Equity Tax Saver, Sundaram BNP Paribas Taxsaver, HDFC Taxsaver, SBI Magnum Tax Gain Scheme 93 – Dividend, Franklin India Taxshield – Growth, DSPBR Tax Saver, Fidelity Tax Advantage

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Pankaj Batra

Jack of multiple trades. A generalist! Founder of Sparse Labs. Find me at FB, Twitter or LinkedIn .

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  • Hi Pankaj,
    I want to invest in Axis Long Term Equity Tax Saver-G = 1000 per month, Canara Robeco Equity Tax Saver = 1500 per month, Religare Tax plan = 1500 per month, Fidelity Tax Advantage=1500 per month, HDFC long term growth = 1000 per month.
    Is this my fund selection is good? i want to invest for next 5 to 7 year. will it give a good return in next 5 - 7 years?

    • @Satya
      These funds selected by you are good. You may also consider replacing Axis LTETS with Franklin India Taxshield.
      Nobody can say how much return it would generate in future as equity returns are market linked and there is no guarantee.

  • Hi Pankaj

    Thank you for your assistance always..

    I have invested in HDFC Top 200 G,Fidelity Equity Growth and IDFC Premier Equity Fund...

    Just wanted your opinion if i should stick to HDFC Top 200 as it has been doing averagely..
    Also i Have 5k odd that i would like to invest every month..what would be good options?Mutual funds.PPF,Fixed Deposits that will give me returns in the next 2- 3 years or so ?

    Is this the right time to buy gold as an investment?

    • @Ronette
      HDFC Top 200 is still one of the best fund in its segment.
      For 2-3 years investment term, I would advise to stick to safer options than equities. Debt mutual funds, Fixed maturity plans, Fixed deposits would be better to invest into for this period.

      Gold is not really a good investment product. It works well only when economies are under performing. I would not advise you to invest into Gold for more than 10-15% of your portfolio.

  • Hi Pankaj,
    Is DTC is been passsed in Budget 2012?.Now can i continue to invest in tax saving mutual fund from April 2012 ?

    • @Santosh
      Direct tax code is not going to implemented from April 2012 also, so tax saving mutual fund investment would continue for another year.

  • Hi Pankaj,
    I'm sandeep.
    My total earing in this 2011-12 yr is 4.25 Lkhs.
    I want to invest nrly 1.5 lakhs to save tax.
    Just I want to knw hw much is a max limit for PPF, Tax saving FD's, Tax saving MF, Tax saving Insurance etc..
    thank u.

  • SEAR SIR,PL TELL ME IF THE ELSS SCHEME AND TAX BENEFITS CONTINUE FROM APRIL.2012 ONWARDS OR NOT?
    THANKS

    • @Dr Sangram
      Tax saving benefits would be available for ELSS in 2012-13 also as direct tax code has been postponed again.

  • Hi Pankaj,
    Sandeep here. I have invested in mutual funds with an SIP of 6000/- pm. Funds composition is as follows:
    HDFC Equity Fund: 1000/-
    IDFC Premier Equity Fund Plan A: 2000/-
    ICICI Focused Bluechip: 1000/-
    DSP Black Rock small and midcap Fund Regular Plan: 1000/-
    Reliance Regular Savings Fund - Equity Plan : 1000/-

    Can you please suggest me whether I need to switch to any other fund or should I continue with the same fund composition.
    Thanks and regards,
    Sandeep

    • @Sandeep
      Funds selected by you are good but its more investing into small and mid cap category which is riskier.
      You need to add large cap (like DSPBR Top 100 equity, Franklin India Bluechip) into portfolio.

  • Hi Pankaj
    I'm new to MF and after consulting some person I want to invest in ELSS. HDFC tax saver - 1,000 + Canara Robeco Equity Tax Saver (D) - 1000.

    Can you please suggest me whether these are good or I have to change it.

  • Pankaj,

    Is it better to invest 6000 per month, splitted across different mutual funds or invest it in PPF?

    Thanks,
    Sanjiv

    • @Sanjiv
      There would not be much difference if you split across multiple tax saving mutual funds as most of them have same underlying investments.
      You may pick one or two best funds and invest into them.
      PPF is different from mutual funds, so you can divide amount between PPF and mutual funds.
      PPF have a maximum 15 years lock in and have safe and fixed returns.

  • Pankaj,

    I have not been able to invest in any tax savings scheme for the year 2011-12 as I bought a flat of my own with my payment going upto Rs 2.5 Lakh while the balance being taken as a Home loan for which the repayment started only in the month of March 2012. Insurance, mediclaim etc put together comes to only Rs 40,000/-! Will I be able to get the exemption of Rs 1 Lac from the advance paid for the flat while filing the IT returns?

    • @Suresh
      There is no tax benefit on advance payment for house purchased.
      80C deduction of 1 lakh is only applicable on insurance, PPF, EPF, NPS, pension plans, Tax saving mutual funds, tax saving fixed deposits, home loan principal repayment, NSC etc.

  • Hi pankaj

    I want to invest in gold.
    Which one is best mutual fund or ETF.

    And if MF then which company ?

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