Best tax saving mutual funds or ELSS to invest in 2023

Section 80c of the Income Tax Act allows a tax deduction of up to Rs 1.5 lakh in a financial year on investments in a few specified instruments. In fact, most salary earners start saving or investing under Section 80c right after their first salary. If you're trying to save on taxes this tax year, you can consider investing in tax-saving mutual funds or ELSSs.

Tax Saving Mutual Funds or Equity Linked Savings Plans (ELSS) help you save income tax under Section 80C of the IT Act. You can invest a maximum of Rs 1.5 lakh in ELSS and claim tax deductions on your investment every financial year. Are you interested? Before proceeding, you should first familiarize yourself with ELSSs.

Tax Savings Mutual Funds, or ELSS, invest in stocks. Therefore, they have a very high risk. You should be aware of this aspect, especially if you are a first-time investor in equity mutual funds. Compared to your usual investments, such as Public Provident Fund, National Savings Certificate, etc., ELSS does not offer guaranteed returns. You may even suffer losses in a bad market.

So why invest in ELSS? First, these schemes have the potential to offer higher returns over a long period. As you know, these schemes invest in stocks. Stocks often offer higher returns over a long period of time. For example, the ELSS category offered an average return of about 15% over 10 years.

Two, ELSS has the shortest lock-up period among tax-saving investments. Most of the other investment options under the 80C basket are government-backed investments. They usually come with longer lock-in periods. For example, PPF is a 15-year product that allows partial withdrawal after six years. The NSC is a five-year product. So if you want to access your money in three years, you need to invest in ELSS. But don't count on it to offer you great returns in three years. You should always keep in mind that investing in stocks is for the long term. You should always invest in equity mutual funds if you have an investment horizon of five to seven years.

And the third and most important point to remember is that ELSS is a great entry point for many investors. Many investors often start with ELSS and the mandatory three-year lock-up period on these charts helps them weather the volatility in the stock market. Once these investors see the rewards in five or seven years, say, they start investing more money in equity schemes.

If you are interested in investing in these schemes, here are the ELSS we recommend that you can consider investing. Here's an update. The Axis Long Term Equity Fund and Invesco India Tax Plan Fund have been in the fourth quartile for the last seven months. The Canara Robeco Equity Tax Saver Fund has been in the third quartile for the past four months.

Best ELSS or tax-saving mutual funds to invest in 2023:

• Axis Long-Term Equity Fund
• Canara Robeco Equity Tax Saver Fund
• Mirae Asset Tax Saver Fund
• Invesco India Tax Plan Fund
• DSP Tax Saver Fund
• Quant Tax Plan (new addition)
• Bank of IndiaTax Advantage (new addition)