Equity Linked Savings Schemes (ELSS) are diversified equity funds that offer tax benefits to investors under section 80 C of the Income Tax. Investment made in ELSS is subject to lock-in for a period of 3 years. In this period, ELSS cannot be redeemed, transferred or pledged.
Equity Linked Savings Schemes (ELSS) are mostly used by Individuals and HUFs(Hindu Undivided Family) to save tax under section 80 C, which stand at a maximum of Rs. 1.5 Lacs. In this sense, they compete against other tax Saving products like PPF, NSC and Five year bank Fixed deposit. While historical returns from ELSS are in general much better than other tax saving instruments, it should be fully understood by the investors that ELSS does not not provide guaranteed returns and even negative returns are quite possible. ELSS provides returns which are linked to performance of underlying equity investments as ELSS Mjutuak Fund schemes are mandated to hold at least 80% of its portfolio in equity instruments.
Despite the risk associated with them, many investors still prefer to invest in ELSS, as along with tax savings, they offer a possibility to provide capital appreciation which may effectively be able to beat inflation. Also the lock in period is lower than that of other tax saving instruments. The returns on maturity of ELSS which used to be tax free till this financial year now stand changed to 10% flat tax on the capital gains at the time of maturity.
The Performance of several ELSS schemes is depicted below. The schemes in first Table are in descending order of their three year annualized returns as on 15 March 2018. Along with Three years annualized returns, the Year to Date Returns (YTD) i.e. from start of year 2018 to 15/03/18 has also been indicated as markets have wilted down considerably in this period. The Bench Mark returns of BSE Sensex for this period are also indicated in the top Row.
| Mutual Fund Scheme | Annualized Return (%) Last 3 Years 15/03/15-15/03/18 | Annualized Return (%) Year to Date 31/12/17-15/03/18 |
| BSE Sensex 200 Index | 8.06% | -15.03% |
| MOSt Focused Long Term – Direct Plan – G | 20.39% | -4.14% |
| L&T Tax Advantage Fund-Direct Plan-G | 14.36% | -17.16% |
| Tata India Tax Savings Fund-Growth-Direct | 14.23% | -30.03% |
| IDFC Tax Advantage (ELSS) Fund-Direct Plan-G | 13.81% | -17.49% |
| Aditya Birla Sun Life Tax Relief ’96 -Growth – Direct | 13.32% | -21.32% |
| DSP BlackRock Tax Saver Fund – Direct Plan – G | 13.16% | -29.59% |
| JM Tax Gain Fund (Direct) – Growth | 12.98% | -17.74% |
| Aditya Birla Sun Life Tax Plan – Direct – G | 12.97% | -21.76% |
| SBI Tax Advantage Fund – Series III – Direct – G | 12.60% | -37.07% |
| HDFC Long Term Advantage Fund -Direct – G | 12.58% | -20.99% |
| Aditya Birla Sun Life Tax Savings Fund – Direct -G | 12.13% | -22.74% |
| Quantum Tax Saving Fund – Direct Plan G | 10.99% | -16.07% |
| Axis Long Term Equity Fund – Direct Plan – G | 10.30% | -11.73% |
| Kotak Tax Saver-Scheme-Growth – Direct | 10.03% | -28.21% |
| ICICI Prudential Long Term Equity Fund – Direct- G | 9.98% | -9.30% |
| Edelweiss Long Term Equity Fund (Tax Savings) – Direct -G | 9.45% | -16.95% |
| UTI – Long Term Equity Fund (Tax Saving) – Direct-G | 9.44% | -21.13% |
| Franklin India TAXSHIELD – Direct – Growth | 9.18% | -21.12% |
| HDFC TaxSaver -Direct Plan – Growth Option | 8.97% | -38.85% |
| Kotak Tax Saver-Scheme-Growth | 8.45% | -29.39% |
| Reliance Tax Saver Fund – Direct Plan – G | 8.20% | -57.58% |
| SBI Magnum Tax Gain Scheme 1993 – Direct-G | 7.53% | -29.09% |
The same have been arranged in descending order of YTD Return as on 15 March 2018 (Start of year 2018 to 15/03/18). The three years returns are also indicated alongside.
| Mutual Fund Scheme | Annualized Return % Year to Date 31/12/17-15/03/18 | Annualized Return % Last 3 Years 15/03/15-15/03/18 |
| BSE Sensex 200 Index | -15.03% | 8.06% |
| Indiabulls Tax Savings Fund- Direct Plan- G | -1.91% | |
| MOSt Focused Long Term – Direct Plan – G | -4.14% | 20.39% |
| ICICI Prudential Long Term Equity Fund – Direct- G | -9.30% | 9.98% |
| Edelweiss Tax Advantage Fund – Direct – G | -9.94% | |
| Axis Long Term Equity Fund – Direct Plan – G | -11.73% | 10.30% |
| Quantum Tax Saving Fund – Direct Plan G | -16.07% | 10.99% |
| Edelweiss Long Term Equity Fund (Tax Savings) – Direct -G | -16.95% | 9.45% |
| L&T Tax Advantage Fund-Direct Plan-G | -17.16% | 14.36% |
| IDFC Tax Advantage (ELSS) Fund-Direct Plan-G | -17.49% | 13.81% |
| JM Tax Gain Fund (Direct) – Growth | -17.74% | 12.98% |
| HDFC Long Term Advantage Fund -Direct – G | -20.99% | 12.58% |
| Franklin India TAXSHIELD – Direct – Growth | -21.12% | 9.18% |
| UTI – Long Term Equity Fund (Tax Saving) – Direct-G | -21.13% | 9.44% |
| Aditya Birla Sun Life Tax Relief ’96 -Growth – Direct | -21.32% | 13.32% |
| Aditya Birla Sun Life Tax Plan – Direct – G | -21.76% | 12.97% |
| DHFL Pramerica Tax Plan – Direct Plan – Growth | -22.30% | |
| Aditya Birla Sun Life Tax Savings Fund – Direct -G | -22.74% | 12.13% |
| Mirae Asset Tax Saver Fund-Direct Plan -Growth | -26.08% | |
| Kotak Tax Saver-Scheme-Growth – Direct | -28.21% | 10.03% |
| SBI Magnum Tax Gain Scheme 1993 – Direct-G | -29.09% | 7.53% |
| Kotak Tax Saver-Scheme-Growth | -29.39% | 8.45% |
| DSP BlackRock Tax Saver Fund – Direct Plan – G | -29.59% | 13.16% |
| Tata India Tax Savings Fund-Growth-Direct | -30.03% | 14.23% |
| SBI Tax Advantage Fund – Series III – Direct – G | -37.07% | 12.60% |
| HDFC TaxSaver -Direct Plan – Growth Option | -38.85% | 8.97% |
| Reliance Tax Saver Fund – Direct Plan – G | -57.58% | 8.20% |