Top ELSS Funds for Tax Saving in 2026
Here are the best-performing ELSS (Equity Linked Savings Scheme) mutual funds based on consistent long-term returns. These funds qualify for Section 80C tax deduction up to ₹1.5 lakh per year.
Top ELSS Funds Comparison
| Fund Name | 3Y Return | 5Y Return | Expense Ratio | AUM | Risk |
|---|---|---|---|---|---|
| Mirae Asset Tax Saver | 18.5% | 16.2% | 0.55% | ₹18,500 Cr | Moderate |
| Axis Long Term Equity | 15.8% | 14.5% | 0.65% | ₹35,000 Cr | Moderate |
| Canara Robeco ELSS | 17.2% | 15.8% | 0.58% | ₹8,200 Cr | Moderate |
| Quant ELSS Tax Saver | 25.4% | 22.1% | 0.75% | ₹9,800 Cr | High |
| Parag Parikh ELSS | 16.8% | 15.2% | 0.62% | ₹4,500 Cr | Moderate |
Returns are indicative based on past performance. Actual returns may vary. Data for illustration purposes.
How to Choose the Best ELSS Fund
Selecting the right ELSS fund requires looking beyond just recent returns. Consider these factors:
- Consistency: Look for funds that have performed well across market cycles, not just in bull markets
- 5-Year CAGR: Prefer funds with 12-15% CAGR over 5 years minimum
- Expense Ratio: Lower is better - look for under 1%, ideally under 0.7%
- Fund Size (AUM): Larger funds (₹500+ crores) are more stable and liquid
- Fund Manager: Experienced manager with 3+ years tenure at the fund
- Investment Style: Understand if the fund is large-cap, multi-cap, or mid-cap focused
ELSS vs Other Section 80C Investments
| Investment | Returns | Lock-in | Risk |
|---|---|---|---|
| ELSS | 12-15% (variable) | 3 years | Market-linked |
| PPF | 7.1% (fixed) | 15 years | Zero |
| Tax-Saving FD | 6-7% (fixed) | 5 years | Zero |
| NSC | 7.7% (fixed) | 5 years | Zero |
| NPS (Tier 1) | 8-12% (variable) | Till retirement | Low-Medium |
ELSS Tax Benefits Explained
- Section 80C Deduction: Invest up to ₹1.5 lakh and deduct from taxable income (old regime only)
- Tax Saved: At 30% bracket, save ₹46,800/year; at 20%, save ₹31,200/year
- LTCG Tax: Gains above ₹1.25 lakh/year taxed at 12.5% (no indexation)
- New Tax Regime: Section 80C not applicable - ELSS still good for wealth creation
SIP vs Lumpsum in ELSS
Both approaches work for ELSS investments:
- SIP (Systematic Investment Plan): Invest ₹12,500/month to exhaust ₹1.5L limit. Benefits from rupee cost averaging, reduces timing risk. Best for most investors.
- Lumpsum: Invest ₹1.5L at once, usually at year-end. Works if market is down. Lock-in starts from investment date, not financial year.
Frequently Asked Questions
Should I invest in one ELSS fund or multiple?
For most investors, 1-2 well-chosen ELSS funds are sufficient. Multiple ELSS funds often hold similar stocks, leading to overlap without real diversification. Choose funds with different investment styles if investing in multiple.
When is the best time to invest in ELSS?
Start early in the financial year (April-May) to maximize the 3-year lock-in benefit. Monthly SIP ensures disciplined investing. Avoid last-minute rush in January-March when markets may be at highs.
Can NRIs invest in ELSS funds?
Yes, NRIs can invest in ELSS funds through NRE/NRO accounts. However, Section 80C tax benefit is only available if filing taxes in India. Capital gains are taxable in India.
What happens after 3-year lock-in?
After lock-in, you can continue holding (recommended for wealth creation), redeem partially or fully, or switch to another fund. Each SIP installment has its own 3-year lock-in from investment date.