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ELSS Mutual Funds

Average Return 15.85%
No. of Funds 39

How ELSS Mutual Funds Work?
Who Should Invest in ELSS Mutual Funds
Taxation on ELSS Funds
How to invest in ELSS Funds?
Frequently Asked Questions

How ELSS Mutual Funds Work?

ELSS Funds are diversified equity funds. These funds primarily invest in stocks of listed companies in a specific proportion according to the investment objective of the fund. The stocks are chosen from across market capitalization (Large Caps, Mid-Caps, Small Caps) and industry sectors. These funds aim to maximize capital appreciation over the long run. The fund manager picks stocks after conducting in-depth market research to deliver optimal risk-adjusted portfolio returns. Learn more about tax saver elss funds to save more tax.

Who Should Invest in ELSS Mutual Funds

Salaried Individuals: When you are a salaried employee, there is a certain amount that goes towards Employee Provident Fund (EPF) which is a fixed income product. If one wants to balance out risk & return on their investment portfolio then ELSS is the best option. In addition to the upside of extraordinary returns, investments in ELSS are also eligible for tax deduction under section 80C. While other products like Unit Linked Insurance Plans (ULIPs) also offer tax benefits, they have a higher lock-in period & lesser return potential. For instance, ULIPs have a lock-in period of five years while PPF has a 15-year lock-in. ELSS Funds have the shortest lock-in period of only three years.
First-time Investors: If you are a new investor, ELSS is an ideal choice, since in addition to tax benefits you get a flavor of equity investing and mutual funds. Equity investing requires patience and discipline to stay invested for the long term. Investors often lack this discipline and pull out of equity investments due to short-term fluctuations in the fund?s performance caused by equity market movements. The lock-in ensures that the investor stays invested for the long term. Like all equity investments, you can invest in ELSS through SIP, which ensures regular investing. SIP helps in rupee cost averaging. Through SIP you accumulate more units when the market is in red and this benefits you when the markets turn favorable.

Taxation on ELSS Funds

Capital gains from ELSS get the same treatment in Income Tax Calculation as the rest of the Equity Instruments. Short-term capital gains (STCG) attract a tax of 20%, while Long Term Capital gains (LTCG) are only taxable if the gains exceed ?1 lac during the financial year. LTCG attracts a tax of 12.5% on the amount exceeding INR 1.25 lakh. Read ETMONEY's blog on How Mutual Fund Investments are taxed to understand the taxation in detail.

How to invest in ELSS Funds?

Investing in ELSS mutual funds on the ET Money app is simple. Follow these steps:

For Desktop Users:

Click on the "Invest" button next to the scheme in the ELSS fund list shown above.
Scan the QR code to download the app.

For Mobile Users:

Tap on the "Invest" button in the ELSS fund list to download the app.
Open the app, sign up, and complete your one-time KYC process, or log in if you're already registered.
Search for the mutual fund you want to invest in and choose your investment mode (Lump sum investment or SIP).
Enter your investment amount.
Fill in the required details, including your bank account for payment, and confirm.

All set! Your investment is complete.

Frequently Asked Questions

Which are the best ELSS Mutual Funds to invest in 2026?

These are top 5 ELSS funds you can invest in 2026

Fund Name	Fund Category	ETM Rank	5.0 Year Return (Annualized)
JM ELSS Tax Saver Fund	Equity	# 6 of 37	15.13 % p.a.
Tata ELSS Fund	Equity	# 25 of 37	13.65 % p.a.
Invesco India ELSS Tax Saver Fund	Equity	# 29 of 37	11.96 % p.a.
Samco ELSS Tax Saver Fund	Equity	Unranked	NA
Canara Robeco ELSS Tax Saver	Equity	# 24 of 37	12.95 % p.a.

How long should I stay invested in ELSS Mutual Funds?

Since ELSS Funds are equity funds i.e. they invest in stocks of companies, you need to stay invested for at least 5 years.

Where do ELSS Mutual Funds invest?

ELSS Mutual Funds have to invest at least 80% of their assets in equities. There is no regulation on which sector or company size they have to allocate. This allows funds in this category flexibility a portfolio fund manager thinks has the chance to give the best returns. Moreover, a Fund Manager can modify the portfolio as per his understanding of the markets. Despite this flexibility, most funds in the category are large cap heavy, i.e., they have a majority of their money invested in India's top 100 companies. They do allocate to mid caps and small caps but a smaller amount as compared to large caps.

Are ELSS Mutual Funds high risk?

ELSS Funds invest in equities, so in a short term, they can be volatile. However, over a long-term, the risk comes down substantially.

What kind of returns can I earn from ELSS ?

ELSS Funds have on an average delivered 14.72% p.a. returns in the last 5 years. Their 3 and 10 year annualized returns are 15.85% and 14.4% p.a.

Should I invest in ELSS Mutual Funds?

ELSS Funds give you dual benefits of tax saving and wealth creation. Your investments in these funds can be claimed as tax deduction under Section 80C, which has a limit of Rs. 1.5 lakh. So, by investing these funds, you can save up to Rs. 46,800 in taxes. The second benefit is wealth creation. Because you are investing in equities, you can align them to your long-term goals. There is an added advantage of them have the lowest lock-in period amongst all tax-saving options. To estimate the value of your ELSS investment done over a specific time, you can use the ELSS calculator. Depending on the inputs you give, the ELSS calculator will display the amount your investment would have accumulated at the end of the investment period.