In India, tax season usually involves a rush to find the best income tax savings strategies. In India, Top Mutual Funds in 2025 for Tax Savings—particularly ELSS (Equity Linked Savings Schemes), which are governed by Section 80C of the Income Tax Act—are among the most well-liked and successful choices for astute investors. With new financial objectives and more strict spending limits in 2025, picking the Best 80C Mutual Funds for 2025 will help you save taxes and build long-term wealth.
If you are a professional working for yourself, a salaried employee, or someone who is just beginning to invest, this guide will explain the best mutual funds under 80C, how they work, and how to choose one that fits your risk level.
What Are Mutual Funds That Save Taxes?
The term “tax saving mutual funds” means Equity Linked Saving Scheme (ELSS) mutual funds, which allow investors to claim Section 80C tax credits of up to ₹1.5 lakh for a calendar year. These funds, which provide the advantages of capital growth and tax savings, mostly invest in stocks and equity-related products.
ELSS has the shortest lock-in term of any 80C option, at just three years, compared to other tax-saving choices like PPF or FD.
Why Choose ELSS to Save Money on Taxes?
- Shortest lock-in period (3 years) compared to PPF (15 years) or NSC (5 years)
- High return potential due to equity exposure
- Eligible for tax deductions under Section 80C
- Convenient SIP (Systematic Investment Plan) options
- Managed by experienced fund managers
Top 80C Mutual Funds 2025 – Our Recommendations
Here’s a list of the best mutual funds under 80C that are showing strong performance and consistency heading into 2025.
1. Axis Long Term Equity Fund
- 3-Year Return: ~13.25%
- Fund Type: Large Cap Oriented ELSS
- Lock-in: 3 years
- Ideal For: Long-term investors with moderate risk appetite
- Why Consider?: Consistently among the top performers with a stable fund manager track record.
2. Mirae Asset Tax Saver Fund
- 3-Year Return: ~15.30%
- Fund Type: Diversified Equity ELSS
- Lock-in: 3 years
- Ideal For: Young investors looking for growth
- Why Consider?: Mirae Asset has earned a strong reputation for its research-backed portfolio and value investing approach.
3. Canara Robeco Equity Tax Saver Fund
- 3-Year Return: ~14.10%
- Fund Type: Large & Midcap ELSS
- Lock-in: 3 years
- Ideal For: Conservative equity investors
- Why Consider?: Strong focus on fundamentals and quality stock selection.
4. Kotak Tax Saver Fund
- 3-Year Return: ~12.90%
- Fund Type: Multi-cap ELSS
- Lock-in: 3 years
- Ideal For: Balanced investors
- Why Consider?: Kotak AMC is one of the most trusted names in India for mutual funds.
5. Quant Tax Plan
- 3-Year Return: ~20% (High Risk)
- Fund Type: Aggressive ELSS
- Lock-in: 3 years
- Ideal For: High-risk takers and experienced investors
- Why Consider?: Very aggressive style but potential for very high returns. Not for risk-averse.
Low Risk Tax Saving Mutual Funds – Are They Possible?
Yes, while ELSS funds inherently carry market risk, some funds focus on large-cap stocks or adopt conservative strategies which reduce volatility. These are considered low risk tax saving mutual funds, suitable for those near retirement or with low-risk tolerance.
- Canara Robeco Equity Tax Saver
- IDFC Tax Advantage Fund
- Kotak Tax Saver
Section 80C Tax Benefits for Mutual Funds
The Income Tax Act’s Section 80C allows a yearly credit of up to ₹1.5 lakh, which can greatly decrease your taxable income. The way Section 80C tax breaks for mutual funds operate is as follows:
- Eligible Investment: Only ELSS funds (not all mutual funds)
- Maximum Deduction: ₹1.5 lakh per year
- Lock-in Period: 3 years
- Taxation on Returns: Gains above ₹1 lakh in a year are taxed at 10% LTCG (Long Term Capital Gains)
How to Choose the Best Mutual Funds Under 80C?
- Fund Performance – Check 3- and 5-year returns.
- Fund Manager Experience – The person managing the fund matters.
- Expense Ratio – Lower expense ratios help in maximizing gains.
- Portfolio Composition – Know what sectors the fund invests in.
- Fund Size & Stability – Larger, established funds usually carry less management risk.
FAQ: Top Mutual Funds in 2025 for Tax Savings
Q1. What are ELSS funds and how do they save tax?
Answer: ELSS (Equity Linked Savings Scheme) funds are mutual funds that mainly invest in stocks. They have a three-year lock-in and are eligible for discounts of up to ₹1.5 lakh under Section 80C of the Income Tax Act.
Q2. In 2025, which ELSS fund is the best?
Answer: Even if a lot of funds do well, Mirae Asset Tax Saver, Axis Long Term Equity, and Canara Robeco Equity Tax Saver are the best picks because of their track record of consistency and outstanding fund management.
Q3. Are ELSS fund returns subject to taxes?
Answer: Yes. 10% tax is applied to long-term capital gains (LTCG) over ₹1 lakh throughout a fiscal year.
Q4. Can I use SIP to invest in ELSS?
Answer: Absolutely! SIPs are a great way to invest in ELSS. Each SIP installment is locked in for 3 years individually.
Q5. How long is the ELSS fund lock-in period?
Answer: Three years is the required lock-in period for ELSS funds. Out of all the Section 80C tax-saving choices, this is the shortest.
Q6. Are ELSS funds risky?
Answer: Since ELSS funds invest in equity, they carry market risks. However, funds focusing on large-cap or diversified portfolios can be relatively lower risk.
Conclusion
Selecting the top mutual funds under 80C is important for future wealth creation as well as tax savings. Options like Axis Long Term Equity, Mirae Asset Tax Saver, and Canara Robeco Equity Tax Saver provide something for anyone, no matter your preference for low risk tax-saving mutual funds or your goal of greater gain. Make the most of your mutual fund tax benefits under Section 80C by starting early or investing smartly rather than waiting until the last minute.
I am a digital marketing executive as well as content writer in the mutual funds related blogs. My goal is to provide simple, interesting and reliable information to readers through my articles so that they always stay updated with the world of mutual funds.
