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Best Tax Saving Investments For 2021

Updated on October 12, 2021 , 4321 views

Looking for best tax saving investments? Don’t know how to save income tax? Tax saving can be easy if done in a correct manner. There are various smart ways to stay away from paying Taxes and save as much as possible. Generally, people indulge into Tax Planning when the financial year is about to end. But, does this ensure prudent investment planning? No! Investing in the early quarters of the financial year is a smarter approach instead. This ensures that you get time to plan your investment and avail the most out of it. Some of the tax saving investments include tax saving Mutual Funds ELSS, PPF, tax saving FD, NPS etc. a detailed list of tax saving investment options is mentioned below.

Some of the Best Investment Plan in India that are beneficial for tax saving include-

Tax-saving

Tax Saving ELSS Funds Or Equity Linked Savings Schemes

Tax saving is an ideal way of financial planning. ELSS Funds are tax saving schemes that are equity diversified and invest the major part of the fund corpus either in equities or equity-related instruments. Being market-linked, equity-linked savings scheme or ELSS funds offer good returns. ELSS funds are tax saving Mutual Funds that offers tax deductions upto INR 1,50,000 under Section 80C of Income Tax Act.

As per the Budget 2018, ELSS would attract Long Term Capital Gains (LTCG). Investors would be taxed at 10% (with no indexation) under long term Capital Gain tax. Gains up to INR 1 lakh are free of tax. Tax at 10% applies to gains above INR 1 lakh.

Top 3 Tax Saving ELSS Funds 2021

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2020 (%)
IDFC Tax Advantage (ELSS) Fund Growth ₹100.78
↑ 0.59
₹3,33915.234.38424.818.918.7
Franklin India Taxshield Growth ₹905.883
↑ 7.27
₹4,87714.632.375.320149.8
Baroda Pioneer ELSS 96 Growth ₹77
↑ 0.80
₹21320.137.770.223.214.218.1
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 14 Oct 21
*Above is the list of Top 3 Tax Saving ELSS Mutual Funds sorted on last 1 year performance and have Net Assets between 100 - 5000 Crore.

1. IDFC Tax Advantage (ELSS) Fund

The investment objective of the Scheme is to seek to generate long term capital growth from a diversified portfolio of predominantly equity and equity related securities. There can be no assurance that the investment objective of the scheme will be realised.

IDFC Tax Advantage (ELSS) Fund is a Equity - ELSS fund was launched on 26 Dec 08. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 19.8% since its launch.  Ranked 3 in ELSS category.  Return for 2020 was 18.7% , 2019 was 1.9% and 2018 was -9.4% .

Below is the key information for IDFC Tax Advantage (ELSS) Fund

IDFC Tax Advantage (ELSS) Fund
Growth
Launch Date 26 Dec 08
NAV (14 Oct 21) ₹100.78 ↑ 0.59   (0.59 %)
Net Assets (Cr) ₹3,339 on 31 Aug 21
Category Equity - ELSS
AMC IDFC Asset Management Company Limited
Rating
Risk Moderately High
Expense Ratio 2.06
Sharpe Ratio 3.28
Information Ratio 0.01
Alpha Ratio 15.08
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
30 Sep 16₹10,000
30 Sep 17₹12,741
30 Sep 18₹12,946
30 Sep 19₹12,796
30 Sep 20₹12,917
30 Sep 21₹22,718

IDFC Tax Advantage (ELSS) Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹481,656.
Net Profit of ₹181,656
Invest Now

Returns for IDFC Tax Advantage (ELSS) Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Oct 21

DurationReturns
1 Month 8.9%
3 Month 15.2%
6 Month 34.3%
1 Year 84%
3 Year 24.8%
5 Year 18.9%
10 Year
15 Year
Since launch 19.8%
Historical performance (Yearly) on absolute basis
YearReturns
2020 18.7%
2019 1.9%
2018 -9.4%
2017 53.4%
2016 0.4%
2015 6.9%
2014 42.2%
2013 15%
2012 36.2%
2011 -23.3%
Fund Manager information for IDFC Tax Advantage (ELSS) Fund
NameSinceTenure
Daylynn Pinto20 Oct 164.87 Yr.

Data below for IDFC Tax Advantage (ELSS) Fund as on 31 Aug 21

Equity Sector Allocation
SectorValue
Financial Services23.52%
Basic Materials15.16%
Consumer Cyclical14.85%
Industrials14.4%
Technology14.22%
Energy4.99%
Health Care4.7%
Communication Services3.38%
Consumer Defensive3.37%
Asset Allocation
Asset ClassValue
Cash1.41%
Equity98.59%
Other0%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Ltd (Financial Services)
Equity, Since 31 May 16 | ICICIBANK
8%₹259 Cr3,600,000
Infosys Ltd (Technology)
Equity, Since 31 Jul 15 | INFY
7%₹235 Cr1,375,000
↓ -25,000
State Bank of India (Financial Services)
Equity, Since 30 Jun 20 | SBIN
5%₹153 Cr3,600,000
HDFC Bank Ltd (Financial Services)
Equity, Since 30 Sep 14 | HDFCBANK
4%₹150 Cr950,000
Deepak Nitrite Ltd (Basic Materials)
Equity, Since 31 Mar 17 | 506401
4%₹137 Cr600,000
↓ -20,000
Reliance Industries Ltd (Energy)
Equity, Since 31 Jul 18 | RELIANCE
4%₹124 Cr550,000
Bharti Airtel Ltd (Communication Services)
Equity, Since 31 Jan 20 | BHARTIARTL
3%₹113 Cr1,700,000
Tata Motors Ltd (Consumer Cyclical)
Equity, Since 31 May 20 | TATAMOTORS
3%₹86 Cr3,000,000
HCL Technologies Ltd (Technology)
Equity, Since 30 Nov 20 | HCLTECH
2%₹83 Cr700,000
Axis Bank Ltd (Financial Services)
Equity, Since 30 Apr 21 | 532215
2%₹75 Cr950,000

2. Franklin India Taxshield

The primary objective for Franklin IndiaTaxshield is to provide medium to long term growth of capital along with income tax rebate

Franklin India Taxshield is a Equity - ELSS fund was launched on 10 Apr 99. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 22.2% since its launch.  Ranked 28 in ELSS category.  Return for 2020 was 9.8% , 2019 was 5.1% and 2018 was -3% .

Below is the key information for Franklin India Taxshield

Franklin India Taxshield
Growth
Launch Date 10 Apr 99
NAV (14 Oct 21) ₹905.883 ↑ 7.27   (0.81 %)
Net Assets (Cr) ₹4,877 on 31 Aug 21
Category Equity - ELSS
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderately High
Expense Ratio 1.97
Sharpe Ratio 2.53
Information Ratio -0.56
Alpha Ratio -4.07
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
30 Sep 16₹10,000
30 Sep 17₹11,201
30 Sep 18₹11,713
30 Sep 19₹12,002
30 Sep 20₹10,704
30 Sep 21₹18,359

Franklin India Taxshield SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for Franklin India Taxshield

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Oct 21

DurationReturns
1 Month 8.6%
3 Month 14.6%
6 Month 32.3%
1 Year 75.3%
3 Year 20%
5 Year 14%
10 Year
15 Year
Since launch 22.2%
Historical performance (Yearly) on absolute basis
YearReturns
2020 9.8%
2019 5.1%
2018 -3%
2017 29.1%
2016 4.7%
2015 4%
2014 56.9%
2013 6.1%
2012 29.4%
2011 -15.2%
Fund Manager information for Franklin India Taxshield
NameSinceTenure
R. Janakiraman2 May 165.33 Yr.
Lakshmikanth Reddy2 May 165.33 Yr.

Data below for Franklin India Taxshield as on 31 Aug 21

Equity Sector Allocation
SectorValue
Financial Services34.95%
Technology12.45%
Utility10.71%
Consumer Cyclical8.86%
Consumer Defensive8.06%
Basic Materials7%
Industrials6.16%
Energy4.17%
Communication Services3.12%
Health Care3.03%
Real Estate0.56%
Asset Allocation
Asset ClassValue
Cash0.94%
Equity99.06%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Infosys Ltd (Technology)
Equity, Since 29 Feb 12 | INFY
10%₹474 Cr2,778,479
Axis Bank Ltd (Financial Services)
Equity, Since 30 Jun 14 | 532215
8%₹403 Cr5,129,842
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 07 | HDFCBANK
8%₹376 Cr2,380,104
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 18 | ICICIBANK
6%₹308 Cr4,283,052
Power Grid Corp Of India Ltd (Utilities)
Equity, Since 31 Oct 16 | 532898
4%₹190 Cr10,825,630
Tata Power Co Ltd (Utilities)
Equity, Since 30 Jun 18 | 500400
4%₹174 Cr13,474,428
Bharti Airtel Ltd (Communication Services)
Equity, Since 31 Jan 07 | BHARTIARTL
3%₹152 Cr2,294,619
United Breweries Ltd (Consumer Defensive)
Equity, Since 31 Dec 14 | 532478
3%₹129 Cr871,834
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Dec 19 | LT
3%₹127 Cr757,133
Grasim Industries Ltd (Basic Materials)
Equity, Since 30 Jun 11 | GRASIM
3%₹125 Cr831,440

3. Baroda Pioneer ELSS 96

The main objective of the scheme is to provide the investor long term capital growth as also tax benefit under section 80C of the Income Tax Act, 1961.

Baroda Pioneer ELSS 96 is a Equity - ELSS fund was launched on 2 Mar 15. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 10.9% since its launch.  Return for 2020 was 18.1% , 2019 was 5% and 2018 was -13.6% .

Below is the key information for Baroda Pioneer ELSS 96

Baroda Pioneer ELSS 96
Growth
Launch Date 2 Mar 15
NAV (14 Oct 21) ₹77 ↑ 0.80   (1.05 %)
Net Assets (Cr) ₹213 on 31 Aug 21
Category Equity - ELSS
AMC Baroda Pioneer Asset Management Co. Ltd.
Rating Not Rated
Risk Moderately High
Expense Ratio 2.55
Sharpe Ratio 3.47
Information Ratio -0.5
Alpha Ratio 10.7
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
30 Sep 16₹10,000
30 Sep 17₹11,466
30 Sep 18₹10,987
30 Sep 19₹11,107
30 Sep 20₹11,133
30 Sep 21₹18,501

Baroda Pioneer ELSS 96 SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for Baroda Pioneer ELSS 96

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 14 Oct 21

DurationReturns
1 Month 7.2%
3 Month 20.1%
6 Month 37.7%
1 Year 70.2%
3 Year 23.2%
5 Year 14.2%
10 Year
15 Year
Since launch 10.9%
Historical performance (Yearly) on absolute basis
YearReturns
2020 18.1%
2019 5%
2018 -13.6%
2017 37.2%
2016 3.3%
2015
2014
2013
2012
2011
Fund Manager information for Baroda Pioneer ELSS 96
NameSinceTenure
Sanjay Chawla1 Nov 155.84 Yr.

Data below for Baroda Pioneer ELSS 96 as on 31 Aug 21

Equity Sector Allocation
SectorValue
Financial Services24.89%
Technology17.14%
Basic Materials13.56%
Industrials12.01%
Health Care7.06%
Consumer Defensive6.17%
Consumer Cyclical5.87%
Communication Services2.54%
Utility1.51%
Energy0.94%
Asset Allocation
Asset ClassValue
Cash2.9%
Equity97.1%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Infosys Ltd (Technology)
Equity, Since 30 Sep 19 | INFY
8%₹17 Cr100,000
↓ -25,500
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Jul 17 | ICICIBANK
7%₹15 Cr205,000
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Jan 17 | HDFCBANK
6%₹13 Cr80,000
Reliance Industries Ltd.
Equity, Since 30 Jun 21 | -
4%₹8 Cr50,000
↓ -7,500
Dalmia Bharat Ltd (Basic Materials)
Equity, Since 31 Jul 20 | 542216
4%₹8 Cr35,000
Axis Bank Ltd (Financial Services)
Equity, Since 31 May 18 | 532215
3%₹7 Cr92,500
Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 30 Nov 20 | SUNPHARMA
3%₹7 Cr90,000
Indian Railway Catering And Tourism Corp Ltd (Industrials)
Equity, Since 28 Feb 21 | 542830
3%₹7 Cr25,000
↓ -5,000
Persistent Systems Ltd (Technology)
Equity, Since 31 Dec 20 | PERSISTENT
3%₹7 Cr20,000
Polycab India Ltd (Industrials)
Equity, Since 28 Feb 21 | 542652
3%₹6 Cr30,000

PPF Or Public Provident Fund

PPF or Public Provident Fund is a tax-free investment option that is backed by the Central Government of India. PPF came into existence in 1968 by the Ministry of Finance. Public Provident Fund aims to provide financial security to people post-retirement. The government of India launched PPF in order to help people inculcate the habit of saving and also plan their retirement well in advance. PPF is one of the best tax saving investments as the interest earned on deposits are not taxable. Moreover, the investments are liable for tax deductions under section 80C of Income Tax Act.

Tax Saving FD Or Fixed Deposit

tax saving FD or Fixed Deposits are financial instruments that are provided by banks for a fixed period of time. The interest rate of FD varies from 4% to 8% (according to the investment tenure). Usually, it is seen that higher the period of investment higher is the rate of interest on FD and vice versa. Though FD is a tax saving and safe investment, the interest earned on them is fully taxable as per the Income Tax Act. Furthermore, if the rate of interest on FD is above INR 10,000, banks deduct a TDS @ 10% p.a.

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NPS Or National Pension Scheme

NPS or National Pension Scheme is a tax saving investment option formulated by the Central Government of India to help people save tax while saving for retirement. As per the National Pension Scheme, one can open a personal retirement account where they can save a pension corpus during their working life. Apart from Retirement planning, investments upto 50,000 under NPS are liable for deductions under section 80 CCD (1B). Under section 80C of Income Tax Act, tax deductions upto 1,50,000 are liable on investments in a National Pension Scheme. This makes NPS one of the best tax saving investments in India.

National Saving Certificate (NSC)

National Saving Certificate (NSC) is a good Tax Saving Scheme to invest in. NSC interest rates are set in the month of April every year. The current interest rate of NSC is 7.9% p.a. Investments up to INR 1,00,000 per year are eligible for IT rebate under the Section 80C of the Income Tax Act. You can invest in NSC through your local post office as well.

Employee Provident Fund (EPF)

Employee Provident Fund or EPF is typically deducted from the salary of an individual which includes 12% of their basic salary. The employer also contributes the similar percentage of which 3.7% goes to the EPF and the remaining 8.3% goes towards the pension fund. It is a defined benefit scheme with interest rates being set every year. The interest rate was 8.8% p.a. for the year 2015-2016. There is no tax at the time of making the investment in EPF. Also, the interest earned is also tax-free. At the time of retirement, individuals can withdraw the entire amount in the account.

ULIP Or Unit Linked Insurance Policy

Unit-linked insurance Policy is an insurance policy that works an insurance cover along with offering market linked returns. Under a ULIP, some part of your investment is invested in Mutual Funds (Equity, Balanced or Debt fund) and the remaining is contributed towards your life cover. One can save tax by investing in ULIP under Sections 80C, 80CCC and 80D of the Income Tax Act. Moreover, the interests that are earned on your ULIP investment are tax-free. Also, under section 10 (10D), tax-free maturity benefits are available as well. When choosing an investment, people usually tend to choose it just to avail tax benefits. Ideally, the investors should look for certain factors before investing. Some of those include maximum tax saving, low-cost investment, substantial returns etc. So, understand the tax saving investments well and then invest.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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