Tax-saving Mutual Funds
Tax-saving Mutual Funds (also known as Equity-linked Savings Schemes or ELSS ) are one of the excellent tax-saving options offering the dual benefit of investment growth and tax savings. With the impending income tax slab for AY 2024-25, it is imperative to explore the best tax-saving mutual funds that provide the investors with superior returns as well as considerable deduction in taxable income under Section 80C of the Income Tax Act.
Before discussing the expert picks, it’s essential to understand the income tax slab for AY 2024-25, which will govern the taxation process for your income earned during the FY 2024. The calculation of tax will be based on the income accruing within the different slabs. It’s essential to consider these slabs when planning your tax-saving strategy to ensure the most significant returns on your investments.
Now, let’s move forward to discuss the best tax-saving funds for 2024.
1. ICICI Prudential Long Term Equity Fund (Tax Saving):
This fund has consistently provided superior returns over a long-term tenure (5 years or more) while allowing you to also claim tax benefits up to Rs. 1.5 lakhs invested under Section 80C of the Income Tax Act.
2. SBI Magnum Tax Gain Scheme:
It is another fund that stands out due to its steady performance over the years and offers both lump sum and SIP investment options.
3. Axis Long Term Equity Fund:
Known for its robust portfolio and excellent returns, this fund could be a great asset for your tax-saving goals.
4. Aditya Birla Sun Life Tax Relief 96:
This fund has demonstrated a historical trend of steady returns and has a diversified portfolio that includes investments in multiple sectors.
5. HDFC TaxSaver:
This ELSS scheme from HDFC is also an excellent tax-saving option with reliable returns over the long term.
While these funds provide good returns, they are exposed to market risk. Hence, it’s advisable to understand the fund’s nature, risk factors, and Non-Performing Assets (NPA) status before investing. NPA is a critical parameter indicating a fund or an asset’s performance, and encountering higher NPAs could be a possible red flag. The risk appetite and the investment objective of the investor should be well-matched with the selected tax-saving fund.
Remember, when it comes to tax-saving, timing is crucial. The earlier you start investing in the financial year, the more time your funds have to grow. The compounding effect over time can significantly transform your small investments into a robust corpus.
Disclaimer: This article aims to provide knowledge about the best potential tax-saving funds for 2024. Trading in the Indian financial market is subject to market risks. It’s recommended that investors should consider all the pros and cons and consult with their financial advisor or conduct their own research before making any investment decisions.
Summary:
Choosing the best tax-saving funds can help investors gain substantial returns while deriving the benefits of tax deductions. With the imminent income tax slab for AY 2024-25, investing in tax-saving mutual funds like ICICI Prudential Long Term Equity Fund, SBI Magnum Tax Gain Scheme, Axis Long Term Equity Fund, Aditya Birla Sun Life Tax Relief 96, and HDFC TaxSaver can be advantageous. However, one should be aware of the risks involved and check the fund’s NPA status. Investing early in the financial year could result in increased growth due to the compounding effect. However, every investor should research extensively or seek professional advice before making any investment decisions, considering the risks tied to trading in the Indian financial market.