Mutual Funds Under 80C for Tax Saving In India 2025

Looking to invest in mutual funds for tax benefits under Section 80C ? This guide covers everything you need to choose the best schemes, maximize returns, and save taxes.

What Are Mutual Funds Under 80C?

For those curious about tax-saving options, mutual funds under Section 80C, mainly ELSS schemes, are worth a look. The catch? You’ll have to leave your investment alone for three years, but in return, you get a sizeable tax deduction up to ₹1.5 lakh for every financial year.

Why Choose ELSS Funds for 80C?

• Tax Deduction: Investments up to ₹1.5 lakh qualify for 80C deduction.
• Lowest Lock-in: Only 3 years, compared to 5 years for FD/NSC and 15 years for PPF.
• Wealth Creation: Exposure to equity markets means higher long-term returns (historically 15–22% p.a.).
• SIP Option: Start monthly investments with as little as ₹500.
• Flexibility: Schemes invest across large, mid, and small caps.
• Performance figures are indicative; always check for the latest NAV and past returns.

How to Select the Best ELSS Mutual Fund

• Assess Returns: Compare annualized returns for 3/5 years over several funds.
• Check Risks: ELSS funds are equity-based, so expect volatility; choose funds with higher ratings for consistency.
• Expense Ratio: A Lower expense ratio means less cost over time.
• Fund Size (AUM): Large AUM can mean more stable management, but focus on returns.
• SIP vs Lumpsum: Decide whether to invest monthly or one-time.

Step-By-Step Details on How to Invest

1. Choose any SEBI-registered AMC or platform (Groww, ETMoney, Dhan, Smallcase, etc).
2. Pick the ELSS fund after reviewing the prospectus and past performance.
3. Set up SIP or make a lump sum investment.
4. Complete e-KYC as required.
5. Track your investment using online tools.

Understanding Risk and Returns

ELSS funds invest in equities; short-term returns can be volatile, but historically they outperform FDs, PPF, and other Section 80C options over the long term.[2]

Taxation Details

• Investment: Deducted from taxable income, up to ₹1.5 lakh per year.[4][2]
• Gains: LTCG tax at 10% above ₹1 lakh in a financial year.[2]
• Dividend: Taxed per prevailing rules.

Common Mistakes that need to be avoided

• Redeeming before 3 years (lock-in applies)
• Ignoring expense ratios and risk profile
• Not reviewing fund performance regularly
• Missing KYC requirements

Conclusion

For 2025, the best mutual funds under Section 80C are ELSS schemes, offering the optimum mix of tax savings and potential wealth creation. Use the selection checklist above to choose the right fund, invest regularly, and stay focused on long-term goals.

Always do your own due diligence or consult a financial advisor before investing.