Top ELSS Funds for Tax Savings in May 2026
Best tax saving mutual funds or ELSS to invest in May 2026
The Economic Times
Image: The Economic Times
Taxpayers looking to save on income tax can consider investing in Equity Linked Savings Schemes (ELSS) under Section 80C of the Income Tax Act, which allows deductions up to ₹1.5 lakh (approximately $1,800 USD). ELSS funds, such as Canara Robeco and Mirae Asset, offer potential long-term returns but come with higher risks compared to traditional savings options.
- 01ELSS funds allow tax deductions up to ₹1.5 lakh under Section 80C.
- 02The average return for ELSS funds over 10 years is approximately 13.61%.
- 03ELSS funds have a three-year lock-in period, shorter than most other tax-saving instruments.
- 04Investors should have a long-term horizon of five to seven years for equity investments.
- 05Recommended funds include Canara Robeco, Mirae Asset, and Invesco India ELSS.
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For taxpayers aiming to save on income tax, investing in Equity Linked Savings Schemes (ELSS) under Section 80C of the Income Tax Act can be beneficial. These schemes allow tax deductions up to ₹1.5 lakh (approximately $1,800 USD) and have shown an average return of 13.61% over the past decade. Unlike traditional savings options, ELSS funds invest in stocks, which means they carry higher risks but also the potential for greater returns over time. The lock-in period for ELSS is three years, making it more accessible than other options like the Public Provident Fund (PPF) or National Savings Certificate (NSC). Investors are advised to consider a long-term investment horizon of five to seven years to weather market volatility. Recommended ELSS funds include Canara Robeco ELSS Tax Saver Fund, Mirae Asset ELSS Tax Saver Fund, and Invesco India ELSS Tax Saver Fund, among others. It's essential for investors to understand the risks involved and ensure they are comfortable with stock market fluctuations before investing.
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Investing in ELSS can lead to significant tax savings for individuals, allowing them to retain more of their earnings. Additionally, the potential for higher returns may encourage more investors to enter the stock market, contributing to broader economic growth.
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