Top Equity Linked Savings Schemes or ELSS Funds in India

Equity Linked Savings Schemes (ELSS) are a unique category of mutual funds that combine tax efficiency with equity market participation. Designed to encourage long-term investing, they offer a structured approach to wealth creation while providing ELSS mutual funds with tax benefits. This blog provides a comprehensive overview of these aspects to enhance your understanding of ELSS fund investments.

List of Best ELSS Funds in 2026

Here is an educational list of the top ELSS funds in India based on their 5-yr CAGR:

Note: The list of ELSS mutual funds in India is from 9th June 2026, and the data is derived from Tickertape Mutual Fund Screener, using the following filters:

• Category: Equity Linked Savings Schemes (ELSS)
• Plan: Growth
• CAGR 5Y: Sorted from Highest to Lowest

Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.

What are ELSS Mutual Funds?

An ELSS fund allocates at least 65% to equities and equity-linked instruments, with limited exposure to fixed-income securities. It has a mandatory three-year lock-in period. It is the only mutual fund category eligible for tax deductions under Section 80C of the Income-tax Act, 1961. This offers an opportunity to claim a tax rebate of up to ₹1,50,000, potentially saving ₹46,800 annually.

Top ELSS Funds: An Overview

SBI ELSS Tax Saver Fund

SBI ELSS Tax Saver Fund is an equity-linked savings scheme that invests primarily in diversified equity portfolios across sectors and market capitalisations. It offers tax deductions under Section 80C and follows a 3 yr lock-in period, aiming for long-term wealth creation while providing tax benefits.

Mirae Asset ELSS Tax Saver Fund

Mirae Asset ELSS Tax Saver Fund diversified equity-linked savings scheme focusing on companies with strong fundamentals and growth potential. It combines tax-saving benefits under Section 80C with long-term capital appreciation opportunities. The fund invests across large-, mid-, and small-cap stocks and has a mandatory 3-yr lock-in.

DSP ELSS Tax Saver Fund

DSP ELSS Tax Saver Fund is an equity-linked savings scheme investing in a diversified equity portfolio across sectors. It aims to generate long-term capital growth while providing tax benefits under Section 80C.

HDFC ELSS Tax Saver Fund

The HDFC ELSS Tax Saver Fund is an ELSS scheme that invests across large-cap, mid-cap, and small-cap companies, with a focus on long-term value creation. It offers tax deductions under Section 80C and has a 3 yr lock-in period.

Nippon India ELSS Tax Saver Fund

Nippon India ELSS Tax Saver Fund is a tax-saving mutual fund that invests in equity and equity-related instruments across sectors. It seeks to achieve long-term capital appreciation while offering Section 80C tax benefits. The fund follows a 3 yr lock-in and maintains a diversified investment approach.

ICICI Pru ELSS Tax Saver Fund

The ICICI Pru ELSS Tax Saver Fund is an ELSS scheme that invests across market capitalisations and sectors to generate long-term capital growth. It offers tax savings under Section 80C and comes with a 3 yr lock-in period, combining equity growth potential with tax efficiency.

Franklin India ELSS Tax Saver Fund

Franklin India ELSS Tax Saver Fund is a diversified equity-linked savings scheme focused on identifying fundamentally strong businesses. It aims to deliver long-term capital appreciation alongside tax-saving benefits under Section 80C. The fund invests across large, mid, and small-cap stocks and has a 3 yr lock-in.

Kotak ELSS Tax Saver Fund

Kotak ELSS Tax Saver Fund is an equity-linked savings scheme investing primarily in equities and related instruments across sectors. It seeks long-term wealth creation while offering tax deductions under Section 80C. The fund has a 3 yr lock-in and follows a bottom-up stock-picking strategy.

Parag Parikh ELSS Tax Saver Fund

Parag Parikh ELSS Tax Saver Fund is an ELSS fund with a value-oriented investment approach, focusing on quality businesses trading at reasonable valuations. It offers tax benefits under Section 80C and invests across market segments and sectors, with a mandatory 3 yr lock-in period.

Motilal Oswal ELSS Tax Saver Fund

Motilal Oswal ELSS Tax Saver Fund is an equity-linked savings scheme that follows a focused investing strategy, selecting high-conviction stocks. It aims to provide long-term wealth creation alongside tax savings under Section 80C. The portfolio typically invests in 25–30 carefully selected companies with a 3-year lock-in.

How to Invest in ELSS Funds in India?

You can easily invest in ELSS mutual funds by following these steps:

• To invest in high-return ELSS funds 2026, you can visit an equity investment platform such as smallcase or Tickertape.
• The next step would be to research and identify the top 5 ELSS funds which aligns with your investment thesis. You can easily select and learn more about the best tax saving mutual funds with the help of a financial tool like the Tickertape Mutual Fund Screener. With 50+ pre-loaded filters, it helps you to create a comprehensive list by giving insights about the fund’s performance. Try it now!
• Once you have selected the best funds based on different metrics and parameters, go to smallcase.com or the smallcase app, and login via your phone number. Click on ‘Discover‘ and enter the name of the specific mutual fund name in the search bar and hit enter. You can click on ‘invest now’ and select whether you want to invest a lump sum amount or start a SIP and start investing!

Here are a few popular smallcases among new investors:

Taxability on the Best ELSS Funds

ELSS funds offer tax benefits under Section 80C, but the returns are taxed based on equity mutual fund taxation rules. Since ELSS funds have a 3-year lock-in period, gains are treated as long-term capital gains when units are redeemed.

Note: Since ELSS units cannot be redeemed before 3 years, gains are generally taxed as LTCG. As of 2026, LTCG above ₹1.25 lakh in a financial year from listed equity shares and equity-oriented mutual funds is taxed at 12.5%.

Features of the ELSS Funds

• Equity-oriented tax-saving scheme: ELSS funds invest at least 80% of their portfolio in stocks, as per the Equity Linked Saving Scheme, 2005. This makes them market-linked tax-saving mutual funds.
• Tax deduction under Section 80C: Investments in ELSS are eligible for deduction under Section 80C of the Income Tax Act, up to ₹1,50,000 in a financial year, subject to the applicable tax regime and rules.
• Three-year lock-in period: ELSS funds have a mandatory 3-year lock-in, the shortest among commonly used tax-saving options under Section 80C.
• SIP and lump-sum investment options: Investors can invest in ELSS funds either through SIPs or as a lump sum. SIP inflows in India stood at ₹30,954 cr in May 2026, showing continued participation through systematic investing.
• Linked to equity market performance: Since ELSS funds invest primarily in equities, their returns depend on stock market movements, fund strategies, sector allocations, and company performance.

Benefits of Investing in the Best ELSS Funds

• Tax-saving benefit: ELSS funds allow eligible investors to claim a deduction under Section 80C, up to ₹1,50,000 in a financial year. This can help reduce taxable income under the old tax regime.
• Potential for long-term wealth creation: ELSS funds invest mainly in equities, which may support long-term capital growth. However, returns are not guaranteed and depend on market and fund performance.
• Shorter lock-in than many tax-saving options: ELSS funds have a mandatory 3-year lock-in, which is shorter than many other Section 80C options, such as tax-saving fixed deposits or PPF.
• Professional fund management: ELSS funds are managed by fund managers who analyse companies, sectors, valuations, and portfolio allocation. This gives investors equity exposure without directly selecting individual stocks.
• Supports disciplined investing: ELSS investments can be made through SIPs, helping investors spread investments over time. India’s mutual fund industry AUM stood at ₹81.92 lakh cr as of 30th April 2026, reflecting the scale of participation in the industry.

Risks Involved While Investing in the Best ELSS Funds

• Market risk: ELSS funds invest mainly in equities, so their value can rise or fall with market conditions. Equity mutual fund inflows fell 40% month-on-month to ₹22,907 cr in May 2026, showing how investor sentiment can shift during volatile periods.
• Lock-in risk: ELSS funds have a 3-year lock-in period. Investors cannot redeem units before the lock-in period ends, which may reduce flexibility in emergencies or when financial needs change.
• Category and portfolio risk: ELSS funds may follow different portfolio strategies across large-cap, mid-cap, small-cap, or multi-cap stocks. Higher exposure to mid-cap or small-cap stocks can increase volatility.
• Fund manager and strategy risk: Actively managed ELSS funds depend on fund manager decisions, stock selection, sector allocation, and valuation calls. A strategy may underperform its benchmark or peers.
• Tax rule risk: ELSS tax benefits depend on the applicable tax regime and prevailing tax laws. Capital gains from equity funds are also taxable as per equity mutual fund tax rules.

Factors to Consider Before Investing in the Best ELSS Funds

• Tax-saving objective: ELSS funds are eligible for Section 80C tax deduction. Investors may review whether this benefit applies under their chosen tax regime.
• Lock-in period: ELSS funds have a mandatory 3-year lock-in. Investors may check whether this aligns with their liquidity needs.
• Risk profile: ELSS funds are equity-oriented, so returns can fluctuate with market conditions. Risk level may vary based on portfolio allocation and market cycles.
• Performance consistency: Historical performance can be reviewed across 3-year, 5-year, and longer periods. Past performance does not guarantee future returns.
• Portfolio composition: Investors may review exposure to large-cap, mid-cap, and small-cap stocks, sectors, and top holdings to understand concentration and volatility.

Who Can Consider Exploring ELSS Funds?

• Tax-saving investors: Those looking to claim deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakh per year.
• First-time equity investors: ELSS for long-term wealth creation offer an entry point into equity markets with a 3 yr lock-in, encouraging disciplined investing.
• Long-term wealth builders: Investors with a time horizon of 5 years or more can benefit from equity-driven growth while enjoying tax advantages.
• Salaried professionals and business owners: Especially those in higher tax brackets, as ELSS combines tax planning with potential capital appreciation.
• Goal-based investors: Ideal for those planning for long-term financial goals like retirement, a child’s education, or wealth accumulation.

To Wrap It Up…

To conclude, navigating the landscape of the best ELSS funds is essential for informed investment decisions. This exploration has shed light on critical factors, including features, benefits, risk management, and expense ratios. Investors should prioritise aligning these aspects with their financial goals. Regular reviews and staying attuned to market dynamics are crucial for optimising ELSS funds’ portfolios.

Considering a Loan Against Mutual Funds (LAMF)? Explore LAMF on smallcase – 

smallcase now offers loans against mutual funds! Although borrowers cannot take loans against funds with a lock-in period yet, they can take loans against any other funds that are not held in demat form or funds held through Zerodha demat accounts. Explore all about the eligibility criteria, documents required, features, and benefits of a loan against mutual funds on smallcase through the articles mentioned below​​:

Frequently Asked Questions About ELSS Funds