List of Best Tax Saving Mutual Funds in India 2025: Top ELSS Schemes

Tax-Saving Mutual Funds, also known as Equity Linked Savings Schemes (ELSS), are a special type of equity mutual fund that offers tax benefits under Section 80C of the Income Tax Act. Investors can claim deductions of up to ₹1.5 lakh under the total limit of Section 80C in a financial year.

ELSS funds have a short 3-year lock-in period, which is the lowest among all tax-saving options. After this period, investors can redeem their money either as a lump sum or through a systematic withdrawal plan (SWP), depending on their needs. In this blog, we will explore a list of the top tax-saving mutual funds and understand how to invest in ELSS funds in India.

List of Top Tax Saving Mutual Funds

Listed below are the best ELSS mutual funds:

Fund Name	AUM (Rs. in cr.)	Alpha	NAV	5Y CAGR (%)	Volatility
Mirae Asset ELSS Tax Saver Fund	25911	9	56	22	14
HDFC ELSS Tax saver	16645	7	1561	27	12
Aditya Birla SL ELSS Tax Saver Fund	15216	8	69	15	13
ICICI Pru ELSS Tax Saver Fund	14425	7	1059	22	12
Parag Parikh ELSS Tax Saver Fund	5524	6	34	22	11
HSBC ELSS Tax saver Fund	4021	9	149	22	17

Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.

Note: The data on the list of the best performing ELSS mutual funds is from 31st December 2024. This data is derived from the Tickertape Mutual Funds Screener.

• Plan: Growth
• Category: Equity>Equity Linked Savings Schemes
• 3Y CAGR: 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.

Overview of the Best Tax Saving Mutual Funds

Here is a brief overview of the top ELSS mutual funds listed above. 

HDFC ELSS Tax saver

HDFC ELSS Tax Saver offers tax benefits under Section 80C while investing in equities. It aims for long-term capital growth with a 3-year lock-in period, making it suitable for tax-conscious investors seeking equity exposure and potential high returns.

HSBC ELSS Tax saver Fund

HSBC ELSS Tax Saver Fund invests primarily in equities, offering tax deductions under Section 80C. It seeks long-term growth through diversified equity investments, with a 3-year lock-in period, ideal for investors aiming for tax-saving and wealth creation.

Mirae Asset ELSS Tax Saver Fund

Mirae Asset ELSS Tax Saver Fund focuses on high-quality equity stocks, aiming for long-term capital appreciation. It offers tax-saving benefits under Section 80C with a 3-year lock-in period, making it suitable for tax-conscious investors seeking exposure to growth-oriented companies.

Parag Parikh ELSS Tax Saver Fund

Parag Parikh ELSS Tax Saver Fund invests in a diversified equity portfolio with the aim of long-term capital growth. It provides tax benefits under Section 80C and has a 3-year lock-in period, ideal for investors looking for both tax savings and equity growth potential.

ICICI Pru ELSS Tax Saver Fund

ICICI Pru ELSS Tax Saver Fund invests in a mix of large-cap and mid-cap stocks, aiming for capital appreciation. It offers tax-saving benefits under Section 80C with a 3-year lock-in period, appealing to investors seeking both tax relief and strong equity returns.

Aditya Birla SL ELSS Tax Saver Fund

Aditya Birla SL ELSS Tax Saver Fund focuses on long-term wealth creation by investing in equities across sectors. It offers tax benefits under Section 80C with a 3-year lock-in, providing tax-saving opportunities for investors with a long-term growth perspective.

What are Tax Saving Mutual Funds?

Tax-saving mutual funds, primarily ELSS funds, offer tax deductions under Section 80C of the Income Tax Act, allowing investors to reduce their taxable income by up to ₹1.5 lakh annually. These funds invest in equities with a 3-year lock-in period, providing potential for high returns. They are suitable for long-term growth while saving on taxes, although they carry market risk.

Taxation on ELSS Mutual Funds as per the Union Budget 2024-25

As per the Union Budget 2024-25, the taxation on Equity Linked Savings Schemes (ELSS) has undergone significant revisions, effective from July 23, 2024. Here’s a breakdown of the key changes:

Type of Gain	Tax Rate	Exemption Limit	Applicable Holding Period
Short-Term Capital Gains (STCG)	20%	Nil	Less than 12 months
Long-Term Capital Gains (LTCG)	12.50%	₹1.25 lakh	12 months or more

How to Invest in Tax Saving Mutual Funds?

You can easily start to invest in tax saving mutual funds by following these steps:

1. To invest in the best tax saving mutual funds, you can visit a mutual fund investment platform such as smallcase.
2. The next step is to research and identify the tax saving mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
3. Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode, either a one-time or lump sum, and complete the process.

Here are a few popular smallcases among new investors:

What are Tax Saving Mutual Funds?

Equity-Linked Saving Schemes (ELSS), also called tax saving mutual funds, belong to the diversified mutual fund category. These funds mainly invest in equities and equity-related assets while keeping a small portion in debt instruments. Investors can claim ELSS investments under Section 80C deductions and save up to ₹1,50,000 every year, which can reduce tax by up to ₹46,800 annually. ELSS funds also have the shortest lock-in period of three years compared to other 80C options.

How do ELSS Tax Saving Mutual Funds Work?

When investors invest in a mutual fund, their capital is added to a common pool. The fund manager invests this money in the equity market to manage risk and returns efficiently. For example, a fund’s asset distribution might look like this:

• Technology sector 10.25%
• Healthcare 15.75%
• Energy 8.90%
• Financial services 20.50%
• Consumer goods 11.20%
• Real estate 7.60%
• Industrials 12.80%
• Utilities 13.00%

This breakdown illustrates how funds are allocated across various sectors. ELSS schemes have a three-year lock-in period, and each SIP instalment follows the same rule. When you redeem, you can only access the units that have completed the lock-in period based on the current NAV. To withdraw funds, calculate the available units, submit a claim form to the mutual fund, and receive the amount in your account.

Features of Tax Saving Mutual Funds

When you choose the best tax saving mutual funds, certain key features help you make better investment decisions. These features distinguish top-performing funds.

• Low Expense Ratio: These funds are cost-efficient, with low expense ratios. A larger portion of your investment stays invested, which helps you maximise returns.
• Well-Diversified Portfolio: The best tax-saving funds maintain a well-diversified portfolio. They invest in various asset classes and sectors to spread risk and improve returns.
• Experienced Fund Managers: Experienced and skilled fund managers lead these funds. They make well-researched investment decisions that enhance the performance of ELSS funds.
• Lock-in Period: Tax-saving mutual funds have a mandatory lock-in period of three years. This encourages long-term wealth creation and reduces short-term market volatility.
• Tax Benefits: Under Section 80C of the Income Tax Act, investments in these funds offer tax deductions up to a specified limit. This helps you lower your tax liability.
• Robust Historical Performance: The best funds show strong performance across different market cycles. This demonstrates their ability to adapt to changing market conditions.
• Transparency: Transparent reporting and regular disclosures give you a clear view of the fund’s performance, holdings, and costs.

Comparing Tax-Saving Investment Schemes and ELSS Funds

Investment Plans	Returns Range	Lock-in Period	Tax Implications
Tax Saving Mutual Funds or ELSS Funds	15% to 18%	3 years	Tax Deduction may happen on Income but investment is not taxable.
Public Provident Fund (PPF)	7% to 8%	15 years	Tax Deduction happens on investment, but income is not taxable.
National Savings Certificate	7% to 8%	5 years	Both investment and income are taxable.
National Pension System (NPS)	8% to 10%	Till Retirement	Investment has tax deductions and income is partially taxable.
Tax Saving Fixed Deposits	6% to 7% (differs by bank)	5 years	Investment has tax deductions and income is taxed only if interest is above Rs 10,000.

This table provides a quick overview of the various tax-saving investment options. This may help you make informed decisions based on your financial goals and preferences.

Benefits of ELSS Funds in India

Investing in tax-saving mutual funds offers several advantages that make them an attractive choice for tax-savvy investors. Here are the key benefits to consider:

• Tax Benefits: Tax-saving mutual funds provide tax deductions of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. This not only reduces your taxable income but also lowers your overall tax liability.
• Short Lock-in Period: Tax-saving mutual funds have a relatively short lock-in period of just three years. This is the shortest among all tax-saving investment options, providing liquidity and flexibility.
• Potential for High Returns: Tax-saving mutual funds primarily invest in equities, offering the potential for substantial long-term capital appreciation. They tend to generate higher returns compared to traditional tax-saving instruments.
• Professional Fund Management: Experienced fund managers manage tax saving mutual funds. These managers make informed investment decisions on your behalf. This expertise can help optimise your portfolio for maximum returns.

Risks of Investing in Tax Saving Mutual Funds

When you look for the best tax-saving mutual funds in 2025, always evaluate their risks.

• Liquidity Risk: Investors may face losses when they try to redeem their investments. Tax saving or ELSS plan funds have a mandatory three-year lock-in period. During this period, investors cannot redeem or transfer their investments.
• Market Risk: Investors may lose money if the market performs poorly. Economic downturns, political events, and changing market sentiment can affect stock prices and reduce the value of even well performing tax saver funds.
• Equity Exposure: Tax saving or ELSS funds must invest at least 80% of their assets in equity securities. This high equity exposure makes the portfolio sensitive to market risks.

Factors to Consider Before Investing in the Best Tax Saving Mutual Funds

Choosing the best tax saving mutual funds can be challenging. To make the right decision, focus on these key points:

• Fund House Track Record: Select fund houses with consistent ELSS funds performance over 5+ years. Funds that consistently outperform their benchmarks often deliver better returns. Evaluate the quality of stocks and overall performance before investing in tax saver mutual funds.
• Returns Analysis: Compare a fund’s returns not only with its benchmark but also against other ELSS mutual funds in the same category. Your investment choice should be based on a detailed review of long-term tax saving fund returns.
• Expense Efficiency: Equity Linked Saving Schemes (ELSS funds) are managed by skilled professionals. A lower expense ratio means more of your returns remain in your pocket, making the fund more efficient for long-term wealth building.
• Portfolio Turnover: A lower portfolio turnover indicates a stable and cautious approach by the fund manager, while a higher turnover suggests frequent adjustments. Choose top ELSS funds with a turnover strategy that aligns with your investment goals.

To Wrap It Up…

Identifying the best tax saving mutual funds for 2025 involves a comprehensive analysis of performance, risk, and financial goals. Equity Linked Saving Schemes (ELSS schemes) offer an excellent opportunity for tax saving mutual fund returns while building wealth over time. To make an informed choice, consider your investment horizon, risk appetite, and financial objectives. Stay updated on market trends, diversify your investments, and consult with a financial advisor if needed. With the right approach, ELSS funds can be pivotal in your long-term tax-saving and wealth creation journey.

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​​:

What is LAMF?	LAMF FAQs	LAMF Eligibility & Documents	LAMF vs Personal Loans	OD Against Mutual Funds
Why Choose LAMF?	Who Should Apply for LAMF?	LAMF Features & Benefits	Introducing LAMF at smallcase	Insta LAS
LAMF – 5 Things to Know	LAS vs Personal Loan	What is LAS?	India’s Credit Growth	HDFC LAMF
LAS Repayment	Qualify for LAS	LAS – 5 Rules to follow	Common Queries About LAMF	ICICI LAMF
LAS When Market is High	Personal Loan on smallcase	How to Use Loan Against Mutual Funds?	6 Things to Know Before Applying for LAMF	Axis LAMF
FAQs: Loan Against Mutual Fund Top-up	SBI LAMF	Things to Know About LAMF	Loan Against ELSS Funds	Bajaj Finserv LAMF
Aditya Birla LAMF

Frequently Asked Questions (FAQs) on Best Tax Saving Mutual Funds