Every individual aims to protect their hard-earned money from taxes. Out of the various instruments available for tax-saving needs, Equity-linked Saving Schemes (ELSS)<\/a> <\/strong>, also known as Tax Saving Mutual Funds<\/strong>, are a popular option for many individual investors opting for the old tax regime.<\/p>\n\n\n\n

[Read: <\/strong>Why ELSS Is Your Best Choice to Build Wealth and Save Tax<\/a>]<\/p>\n\n\n\n

What are ELSS?<\/strong><\/p>\n\n\n\n

SEBI defines ELSS as equity-oriented mutual funds that invest a minimum of 80% of their total assets in equity and equity-related instruments and come with a mandatory lock-in period of 3 years, along with tax benefits. These funds have the flexibility to invest across market caps and sectors.<\/p>\n\n\n\n

Investing in ELSS offers investors the triple advantage of tax-saving (under Section 80C of the Income Tax Act), wealth creation through equities, and the lowest lock-in period compared to traditional tax-saving instruments.<\/p>\n\n\n\n

At present, there are around 40 ELSS, or Tax Saving Mutual Funds, in India offered by different mutual fund houses. Thus, it can be challenging to select the right scheme for the portfolio. Now the question that may arise here is — How should one select the best ELSS for tax-saving given the plethora of options available?<\/em><\/p>\n\n\n\n

Many individuals prefer to take the easy way out and select the scheme based on its popularity, while others pick the one with the lower net asset value (NAV). Few others, simply select the top-performing ELSS of the previous year.<\/p>\n\n\n\n

In my view, these are imprudent approaches to selecting the best ELSS that may fail to pay off in the long run. Remember that ELSS comes with a mandatory lock-in period of 3 years. So, if an investor selects a not-so-worthy scheme, investors may have to bear the cost of underperformance for the entire period.<\/p>\n\n\n\n

[Read: <\/strong>Tax Saving Mutual Funds: Who Should Invest, How to Invest, and the Best Ones to Invest<\/a>]<\/p>\n\n\n\n

In this article, we will discuss in detail how should investors select the best ELSS for their portfolio in 2024…<\/p>\n\n\n\n

How to select the best ELSS for tax saving?<\/strong><\/p>\n\n\n\n

To narrow down the best ELSS for your tax-saving needs that have the potential to create superior long-term wealth, investors need to thoroughly assess the schemes on various quantitative and qualitative parameters as listed below.<\/p>\n\n\n\n

You can also watch this video to learn about the key factors in choosing the best mutual funds:<\/p>\n\n\n\n