Best ELSS Mutual Funds for Tax Saving Under Section 80C

ELSS mutual funds have become a primary choice for Indian investors looking to save taxes and build assets over the long term. ELSS funds help save tax under Section 80C and offer returns that are uncorrelated to traditional tax-saving options such as the PPF or NSC.  

If you are looking to invest in the best ELSS mutual funds have created an easy-to-follow guide to help you understand what mutual funds are, how they work, and the top ELSS funds one can look at in 2026.  

 

What Are ELSS Mutual Funds? 

 ELSS or Equity Linked Savings Scheme is a category of equity mutual funds that primarily invest in the stock market. They are eligible for a tax write-off under Section 80C of the Income Tax Act.  

Features of An ELSS Mutual Fund

• At least 80% investment in equities. 
• 3-year lock-in period (this is the lowest from all tax-saving schemes).  
• Eligible for a 1.5 lakh tax write-off.  
• Greater return potential than traditional tax-saving mutual funds. 
• Considering the lock-in and high growth potential, ELSS is a smart choice when it comes to wealth creation along with tax savings.

 

What are the best ELSS Tax Saving Funds?

 

1. Lock-in Period is 3 Years

Among other savings tax funds like PPF and NSC, ELSS funds have the shortest lock-in period. You will be able to retrieve your savings after 3 years and you can either redeem or continue investing after monitoring your funds. 

 

2. Potential for Higher Returns

Because ELSS funds invest in stocks, you may see a higher return than other tax-saving funds like ELSS that invest in non-equities. 

 

3. Save Taxes and Build Wealth

With ELSS savings funds, not only do you save on taxes, but you are also investing in your wealth and saving over the years. 

 

4. SIP

Investing in ELSS funds may be easier for beginners as you can invest using the SIP system, which is a system that allows regular investing intervals.

 

5. Good for Long Term Goals

Suitable for long-term goals like retirement or creating wealth as you will be able to compound your savings over time.

 

 

How to Choose the ELSS Mutual Funds?

The best way to evaluate the best ELSS funds is by considering these criteria.

 

1. Over a Period of 5 - 10 years

The ELSS scheme works best for long durations. 

 

2. Experience of the Fund Manager

Experienced fund managers are able to handle market volatility with greater ease.

 

3. Quality of The Portfolio

Look for funds that have a mid-cap or large-cap in their portfolio. Consistent funds are also best. 

 

4. Expense Ratio

A lower expense will yield a better return.

Consistency over the years 

Look for funds with consistent performance and track history without extreme volatility with jumps and dips in performance.

 

Top ELSS Funds for 2025 (Based on Long-Term Performance)

 

1. Axis Long Term Equity Fund 

Veteran in the ELSS mutual fund space.  

Highlights: 

• Constructed with quality large-cap stocks.  

• Long-term wealth generation.  

• Fit for moderate risk.  

2. Mirae Asset Tax Saver Fund 

Ranked as one of the top ELSS funds for continuous return generation.  

Highlights: 

• Large- and mid-cap diversification.  

• Risk is managed well.  

• Has a proven track record over a long duration.  

 

3. Kotak Tax Saver Fund 

Offers a balanced portfolio and consistent, steady performance.  

Highlights: 

• Ideal for beginners in ELSS investment.  

• Has consistently returned generations over the years through numerous cycles.   

• Low volatility in comparison with industry peers.  

4. ICICI Prudential Long Term Equity Fund 

Among the ELSS tax-saving funds, a fundamentally strong choice.  

Highlights: 

• Active and engaged management.  

• Fit for high-risk portfolio.  

• Has strong multi-cap exposure.  

5. SBI Long Term Equity Fund 

This is an ideal option for a conservative equity investor.

Highlights:

• Brand Loyalty.

• Solid Foundation.

• Excellent Stock Picking Strategy.

Taking into account historical performance, portfolio construction, and the expertise of the fund managers, these are the best ELSS funds.

 

How Much To Invest In ELSS?

The amount of your ELSS investment is influenced by:

• Annual tax calculation.

• Goals.

• Time available to you.

• How much risk can you take?

Investments of ₹5,000-₹10,000 per month are the suggested amount to achieve growth and tax benefits over a longer period.

 

SIP vs Lumpsum in ELSS: What is the Better Option?

SIP Investment	Lumpsum Investment
Lower risk of timing the market	Ideal for people with extra funds
Excellent for employees	Preferably in stable or declining market conditions
Promotes Financial Discipline	-
Optimal for Compounding Over A Long Period	-

 

ELSS Tax Benefits Under 80C

Investing in ELSS allows you to claim a maximum of ₹1.5 lakh tax exemption under 80C.

Let's say your income for tax purposes is ₹10 lakh. If you invest ₹1.5 lakh in ELSS mutual funds, you are left with a taxable income of ₹8.5 lakh.

As a result, ELSS has become a highly effective tax-saving mutual fund component.

 

ELSS Fund Risks 

ELSS also has some risks since it invests in equities, such as:  

- Volatile market  

- Short-term changes

- Performance inconsistencies  

Nevertheless, the compulsory 3-year lock-in keeps most investors invested long enough to receive the full advantages of market growth.  

 

Who Should Invest in ELSS?

Funds from ELSS are suited for:  

• Employees looking to manage taxes.

• New investors in the equity market.

• People who want to build wealth over time.

• People are looking to get significant returns on their investments.

• Individuals wanting to invest through SIP.  

If savings on taxes and accumulating wealth are your goal, an ELSS mutual fund is inarguably the best option.   

 

 

Conclusion 

If you opt for the best ELSS mutual funds, you can save some taxes as per Section 80C of the Income Tax Act and at the same time, create wealth through investments in equity. Beginners and long-term investors can benefit from ELSS's outstanding tax savings combined with investment opportunities.  

Depending on their investment goals and risk tolerance, investors can select from Axis Long Term Equity Fund, ICICI Pru Long Term Equity, and Mirae Asset Tax Saver. ELSS is among the best tax-saving mutual funds for contemporary investors that value growth, tax efficiency, and diversification.

 

DISCLAIMER: This blog is NOT any buy or sell recommendation. No investment or trading advice is given. The content is purely for educational and information purposes only. Always consult your eligible financial advisor for investment-related decisions.