Top 10 SIPs for Tax Benefits
SIP investments are ideal to create wealth and ensure a secure financial future. Instead of investing a large chunk of your funds in one go, you can keep investing every month in the mutual fund(s) of your choice. With some options, you can even enjoy tax benefits.
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What is a Tax Saving SIP?
Tax saver SIP plans let you periodically invest in a mutual fund while also bringing considerable tax savings.
Considering the absence of personal income taxes in the UAE, you won’t need to look for the best tax saving SIPs. However, if you’re investing in India, you can go for an option like ELSS or Equity Linked Savings Schemes. These funds have a lock-in period of 3 years.
How Can SIP Help You Save Taxes?
When you invest in an ELSS through SIP for tax benefit, you can claim a deduction of INR 1.5 lakh from your taxable income as per Section 80 (C) of the Income Tax Act, 1961. The maximum amount you can save in taxes per year with this investment type is 46,800.
When you invest in SIP for tax benefits, you get to enjoy the following benefits —
- Save on taxes — Deduction of up to INR 150,000
- Feasible lock-in period — ELSS lock-in periods are usually lower than those of instruments like PPF
- High returns — Since ELSS funds are related to the market, you get to enjoy higher returns than those of standard instruments like FD, PPF, and more
If you’re an NRI in the UAE, you can easily invest in the best tax saving SIPs of India.
You will need to open an NRE or NRO account and complete the KYC process. Once done, you can start investing directly or via Power of Attorney (PoA).
Which are the Top 10 Tax Saving SIPs?
Here is a list of the best tax saving SIPs or ELSS funds —
| SIP for Tax Benefit | 1-Year Return* (p.a) | 3-Year Return* (p.a) | 5-Year Return* (p.a) |
|---|---|---|---|
| Quant ELSS Tax Saver Fund | 44.8% | 32.6% | 37.9% |
| SBI Long Term Equity Fund | 54.3% | 37.7% | 32.53% |
| Bank of India ELSS Tax Saver Fund | 42.7% | 30.86% | 29.9% |
| Motilal Oswal ELSS Tax Saver Fund | 54.2% | 35.7% | 30.3% |
| HDFC ELSS Tax Saver Fund | 41.7% | 31% | 28.5% |
| JM ELSS Tax Saver Fund | 52.4% | 32.5% | 29% |
| DSP ELSS Tax Saver Fund | 47.1% | 29.6% | 27.8% |
| Bandhan ELSS Tax Saver Fund | NA | 25% | 27.7% |
| Franklin India ELSS Tax Saver Fund | 40.2% | 28.9% | 27.3% |
| Nippon India ELSS Tax Saver Fund | 40.7% | 27.8% | 26.3% |
*For investments through the route of SIP
Frequently Asked Questions
Is SIP a risk-free investment?
While SIPs are considered relatively safe investments, they are not entirely risk-free. This is because SIPs simply facilitate investment in mutual funds, which are linked to the inherently risky stock market.
Which is better, SIP or ELSS?
No such comparison can be made between ELSS and SIP. ELSS represents a category of mutual funds, while SIP is a way of investing in mutual funds.
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