Best 10 Tax-Saving Mutual Funds (ELSS) for 2025

In wealth creation, tax planning plays a significant role and a prudent decision on the kind of investment medium to use might make a big difference in your financial life. Under Section 80C of the Income Tax Act there are a number of tax saving schemes in which an investor can choose and one of the most common ones has been the Equity Linked Savings Schemes (ELSS) given that the investor gets a tax benefit and at the same time the possibility of making money.

What are Tax-Saving Mutual Funds or ELSS?

ELSS funds are equity mutual funds which provide tax benefit under section 80C and a future capital growth potential as well. Under the Equity-Linked Savings Scheme 2005 notification of Ministry of Finance such funds are required to invest at least 80 per-cent of the total asset in equity and equity-linked instruments.

Key features of ELSS

Under ELSS (Equity Linked Saving Scheme) funds, tax deduction of the amount up to 1.5 lakh can be claimed under 80 C and they are known to be the most short-term locked-in investment with only 3 years. 

They offer flexibility of investment in different companys and market cap, they are professionally managed and minimize risk in diversification of investments by having multiple numbers of stocks and diversification of these by sectors.

Let’s know top 10 tax-saving mutual funds for 2025

1. Motilal Oswal ELSS Tax Saver Fund

First launched in January 2015 as Motilal Oswal Long Term Equity Fund, this fund was renamed in October 2023 to be in line with the category standards. It has had excellent AUM 1 crores and above, which is more than 4,500 crores and has shown great subsequent growth and investor trust.

The fund is bottom-up oriented as it gives prominence to the parameters of QGLP. It is concentrated on finding superior enterprises with endurable booming opportunities but at competitive prices.

Portfolio Composition:

• Total Stocks: 34 (compact portfolio approach)
• Market Cap Allocation: 40.3% mid-cap, 32.3% small-cap, 26.6% large-cap
• Top Holdings: Eternal (5.3%), MCX (4.9%), Trent (4.7%)
• Sector Exposure: Capital goods (31.8%), Finance (19.6%), Retail (10.0%)

Performance Metrics:

• 3-Year Returns: 26.4% CAGR
• 5-Year Returns: 26.2% CAGR
• Risk Profile: High (Standard Deviation: 19.07)
• Sharpe Ratio: 0.39

The fund has reported fantastic returns but potential investors need to know that it has provided excellent returns at the cost of providing high volatility in terms of mid and small-cap bias.

2. SBI ELSS Tax Saver Fund

Among the oldest ones in ELSS category, this fund was started in March 1993 under the name SBI Long Term Equity Fund. It has recently changed its name to SBI ELSS Tax Saver Fund in June 2025 and has an incredible track record of more than 32 years of existence and AUM of more than 30,600 crores.

The fund is geared towards being moderate in that it heavily relies on large-cap companies with a touch of mid and small-caps. It applies an investment philosophy that is value-oriented and has bottom up and top-down selection of stocks.

Portfolio Composition:

• Total Stocks: 67 (well-diversified)
• Market Cap Allocation: 61.1% large-cap, 21.6% mid-cap, 11.2% small-cap
• Top Holdings: HDFC Bank (9.3%), Reliance Industries (5.5%), ICICI Bank (3.5%)
• Sector Allocation: Banks (22.1%), Auto & Ancillaries (10.8%), IT (9.8%)

Performance Metrics:

• 3-Year Returns: 26.3% CAGR
• 5-Year Returns: 27.4% CAGR
• Risk Profile: Moderate (Standard Deviation: 12.92)
• Sharpe Ratio: 0.50, Sortino Ratio: 1.19

An excellent fit to investors who require sustainable yet moderate risk performance by spreading the investment in a large-cap biased portfolio.

3. HDFC ELSS Tax Saver Fund

Introduced in March 1996 as HDFC TaxSaver Fund and redeveloped in October 2023, this is a great fund which has created a good reputation due to the disciplined method of investment. It is one of the most well-known ELSSs with an AUM of more than 16,900 crores.

The fund is high conviction in nature merging a growth and value approach. It focuses on such companies as have good management, great corporate governance, and ESG sensitivity and has a long-term investment period.

Portfolio Composition:

• Total Stocks: 53 (concentrated approach)
• Market Cap Allocation: 77.9% large-cap, 10.6% small-cap, 3.5% mid-cap
• Top Holdings: HDFC Bank (9.8%), ICICI Bank (9.4%), Axis Bank (8.5%)
• Sector Exposure: Banks (35.7%), Auto & Ancillaries (14.1%), Healthcare (8.6%)

Performance Metrics:

• 3-Year Returns: 23.9% CAGR
• 5-Year Returns: 24.6% CAGR
• Risk Profile: Low-Moderate (Standard Deviation: 11.96)
• Sharpe Ratio: 0.47, Sortino Ratio: 1.14

 Appropriate to more conservative investors who want to be more large cap oriented in their portfolios and less volatile.

4. ITI ELSS Tax Saver Fund

One of the newer entrants was started in October 2019, as ITI Long Term Equity Fund. Though the fund has lower track record, it has delivered good performance as it has an AUM size of more than 400 crores.

Its fund pursues a path of Growth at Reasonable Price (GARP), emphasizing on margin of safety, business quality and low leverage. It uses both top-down and bottom-up methodology in selecting its stocks.

Portfolio Composition:

• Total Stocks: 73 (diversified approach)
• Market Cap Allocation: 39.5% large-cap, 9.9% mid-cap, 47.9% small-cap
• Sector Exposure: Banking & Finance (29.8%), Realty (9.6%), IT (7.2%)

Performance Metrics:

• 3-Year Returns: 21.9% CAGR
• 5-Year Returns: 22.1% CAGR
• Risk Profile: High (Standard Deviation: 15.22)

The fund can be used by those investors who have a higher risk tolerance and want aggressive growth since it is small-cap-oriented.

5. JM ELSS Tax Saver Fund

It was initially initiated as JM Tax Gain Fund in March 2008 and was renamed in November 2023 but since August 2020, this fund has turned out to be an incredibly growing fund with the current AUM of over 200 crores.

Its fund finds favor in stories of secular growth in terms of compounding and targeting scalable business models and good management. It assesses the global competitiveness, hence management capabilities and industries trends.

Portfolio Composition:

• Total Stocks: 48 (focused portfolio)
• Market Cap Allocation: 47.3% large-cap, 16.8% mid-cap, 32.9% small-cap
• Top Holdings: L&T (5.1%), ICICI Bank (4.8%), HDFC Bank
• Sector Exposure: Banking & Finance (28.6%), IT (10.8%), Auto & Ancillaries (8.5%)

Performance Metrics:

• 3-Year Returns: 21.5% CAGR
• 5-Year Returns: 24.8% CAGR
• Risk Profile: Moderate-High (Standard Deviation: 14.6)

6. DSP ELSS Tax Saver Fund

Launched on July 19, 2010, the DSP ELSS Tax Saver Fund aims to generate medium to long-term capital appreciation through a diversified equity portfolio. With an AUM of ₹1,742.757 crores, it represents a solid mid-sized option in the ELSS category.

The fund seeks to create wealth through a substantially equity-focused portfolio while enabling investors to avail tax deductions under the Income Tax Act.

Key Features:

• Expense Ratio: 1.63% (reasonable for equity funds)
• Investment Horizon: Medium to long-term focus
• Portfolio Approach: Diversified equity and equity-related securities

7. Franklin India ELSS Tax Saver Fund

With over 12 years of operational history since its launch on January 1, 2013, Franklin India ELSS Tax Saver Fund has established itself as a reliable investment option with an AUM of ₹6,883 crores.

Performance Highlights:

• 1-Year Returns: 3.80%
• Since Launch Returns: 16.57% average annual returns
• Money Doubling Period: Every 4 years
• Expense Ratio: 1.01%

The fund has a heavy exposure to Financial, Technology, Services, Energy, and Construction industries with the highest-ranking stock comprising ICICI Bank, HDFC Bank, Larsen & Toubro, Infosys, and Bharti Airtel. 

It is managed by sad COO R Janakiraman and Rajasa Kakulavarapu who are professionals to ensure the strategic implementation is consistent.

8. Parag Parikh ELSS Tax Saver Fund

One of the much newer and fast growing funds started on July 4, 2019 and already has an AUM of 5,557 crores. The fund is attractive since it has a low expense ratio of only 0.62% thus it is cheap to invest in.

Performance Metrics:

• 1-Year Returns: 9.27%
• Since Launch Returns: 22.96% average annual returns
• Money Doubling Period: Every 4 years
• Risk Management: High ability to control losses in falling markets

The scheme is sector oriented and investment is divided across Financial, Automobile, Technology, Consumer Staple and Energy sector with top holdings Bajaj Holdings & Invsts, Maharashtra Scooters, Power Grid Corp., Coal India and ITC.

Headed by the top team featuring Rajeev Thakkar, Raj Mehta, Raunak Onkar, Rukun Tarachandani and Mansi Kariya.

9. Nippon India ELSS Tax Saver Fund

Established on January 1, 2013, this fund has built a substantial presence with an AUM of ₹15,623 crores. It represents a medium-sized fund with consistent performance track record.

Performance Analysis:

• 1-Year Returns: 0.91%
• Since Launch Returns: 14.86% average annual returns
• Money Doubling Period: Every 5 years
• Expense Ratio: 1.01%

The fund has exposure in the Financial, Energy, Services and Consumer Goods sector and Automobile sectors and also has key holdings in ICICI Bank, HDFC Bank, Axis Bank, Infosys and NTPC.

Being professionally managed by Rupesh Patel and Ritesh Rathod, it has ensured that it does strategic portfolio management.

10. JM ELSS Tax Saver Fund

The JM ELSS Tax Saver Fund Direct Plan-Growth tax-saving mutual fund launched in January 2013 is a 12.5 year old fund of the JM Financial Mutual Fund family. At June 30 2025, its assets manage only 209 crore, rendering it a small fish in the ELSS category. The fund has also had a sole purpose of increasing the wealth of investors as well as offering tax advantages on Section 80C.

Although it has given a 1-year 1.19% negative returns, its long-term average yearly returns have been good at 17.64%, a factor which is quadrupling money every 4 years. Its expense ratio is 1.11%, marginally larger than its peers, though the fact that it limits the downside risks on volatile markets is remarkable.

Financials, Capital Goods, Technology, Healthcare and Services are the major investments of the fund, albeit Financials and Capital Goods are slightly lowly invested than the peers. Its best stocks are Larsen & Toubro, ICICI Bank, HDFC Bank, Reliance Industries and One source special pharma.

Since being managed by an experienced three-member team of Asit Bhandarkar, Satish Ramanathan, and Ruchi Fozdar, the fund has remained faithful to its mission of delivering long term capital growth together with tax savings, by allocating more than 80% of the portfolio in equity oriented instruments.

Know Tax Benefits and Implications 

Section 80C Benefits

• Deduction Limit: Up to ₹1.5 lakh annually.
• Tax Savings: Can save up to ₹46,800 in taxes (for 30% tax bracket).
• Lock-in Period: Only 3 years, shortest among all 80C investments.

Long-term Capital Gains (LTCG) Tax

• Exemption: First ₹1 lakh of LTCG is tax-free.
• Tax Rate: 10% on gains exceeding ₹1 lakh (without indexation).
• Holding Period: Gains after 3 years are considered long-term.

Final thoughts

ELSS funds provide a great balance of both wealth and taxation advantages. The mentioned funds, which serve as part of this guide offer the best funds possible in 2025, and have their own sets of distinct features which serve as an individualistic perspective with regard to various types of investors.

Choosing ELSS funds One must look at the risk appetite, period of investment and overall financial objectives. Keep in mind that the lock-in period is only 3 years, but to achieve the best outcome usually a longer commitment is required. The portfolio should be diversified in around 2-3 well-researched ELSS funds to optimise the risk adjusted returns.

Above all these, start and invest early. Tax benefits coupled with the power of compounding make ELSS funds an excellent element of any detailed financial strategy.

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