How to save tax by investing in Equity Linked Savings Schemes (ELSS)?

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Best Performing Mutual Funds

1. Largecap Funds:
1. DSP BlackRock Top 100 Fund
2. ICICI Prudential Focused Blue Chip Fund
3. Birla Sun Life Front Line Equity Fund
2. Large and Midcap Funds
1. ICICI Prudential Dynamic Plan
2. HDFC Top 200 Fund
3. UTI Dividend Yield Fund
3. Mid and SmallCap Funds
1. Reliance Equity Opportunities Fund
2. DSP BlackRock Small & Midcap Fund
3. Sundaram Select Midcap
4. IDFC Premier Equity Fund
4. Small and MicroCap Funds
1. DSP BlackRock MicroCap Fund
5. Sector Funds
1. Reliance Banking Fund
2. Reliance Banking Fund
6. Gold Mutual Funds
1. Relaince Gold Savings Fund
2. ICICI Prudential Regular Gold Savings Fund
3. HDFC Gold Fund

Investment in ELSS is considered to be one of the best option to save tax because of many reasons like low expenses, short lock-in period, high liquidity and high growth in long-term. Year 2008 and 2009 had been extremely volatile. Still, many mutual funds have delivered positive return in past 3 years.

The limitations in ELSS are that premature withdrawal is not allowed. There is a 3 year lock in period. Also ELSS returns are not guaranteed as they are market linked investments.

Summary of ELSS Details

	Return (p.a.)		Market linked (The last 5 years' return from ELSS has been approximately 20% compounded annually)*
Risk		Market and Fund manager risk
Lock In		3 years
Income from Investment		Basically, dividend which is Tax Free
Maturity Proceeds		Long term capital gain on sale of equity oriented mutual fund is tax free.
NRI/PIO eligible		Yes