India Tax Saver Funds

With the financial year moving towards the end, all the tax payers get prepared to file their income tax returns. A few investments under India Tax saver funds are the investments which lower down the tax payable amount of the tax payers. In India there are number of tax saver funds, however an individual needs to pick one which suits his requirements the best. Indian tax saver funds have the potential to come out as a major force in the tax-saving space.

Equity-linked Savings Schemes (ELSS) also known as tax saver funds are the diversified equity funds offering various tax benefits to an individual filing an income tax return. The tax saver funds in India usually have a lock-in period of three years unlike many other typical diversified equity funds. Though the fund didn't get popularity in the early stage, it started catching up off in the later phase. The tax saver fund provides investors a rebate under section 88 of the Income Tax Act. A maximum of Rs. 10,000 per annum can be invested in this tax saver fund. This fund is a high risk-high return investment and encourages disciplined investment activities.

India tax saver funds provide an opportunity to invest in sync with the risk appetite. It also has a lower lock-in period of three years as compared to the lock-in period of other tax saver investment funds such as NSC and which has a lock-in period of four years. The dividend earned in tax saver funds is free. An individual can also enjoy long-term capital gain while selling the units of the fund.

There are many tax saver funds in India however some of the popular ones include:

Franklin India Tax shield: Franklin India Tax shield scheme aims to provide tax rebate along with medium to long term growth of capital. Investors can consider buying it keeping in mind its long term track record in delivering steady returns and its ability to contain downsides. Over last five year Franklin has been delivering steady returns during periods of market upswings. It has also managed to contain downsides better than its benchmark and peers. Franklin India Tax shield is suitable for people who do not have much of an appetite for risk.

Magnum Tax gain: Magnum Tax gain is one of the finest tax gain schemes available in India. A person can invest up to Rs. 10000 and can have a tax rebate under section 80C of the Income Tax Act. It is an open ended ELSS scheme. Its consistent performance over a five-year period places it at the top of the ELSS universe as well as diversified funds. The fund has been successful in outperforming its peers with wide margin of about 10 percentage points.

HDFC Tax Saver: Considering its long-term track record in delivering steady returns, an investor can buy the units of HDFC Tax Saver Fund. It is considered to be the best performing fund as it delivered a compound annual return of 28.2 per cent over a five-year period. It invests in large-cap stocks and can be suitable for individuals who have a low-risk appetite.