Do all mutual funds qualify for tax benefits under Section 80C?

It is a really common question among the millennials as to whether all mutual funds qualify for tax benefits under Section 80C or not. Mutual funds seem to be a growing trend among the people as an investment option. Mutual funds offer excellent opportunities for the people who are looking forward to creating a good amount of wealth and generate a considerable bank balance for their future.

However, before you make your online demat account it is important for you to know about some information. The first and foremost of them is the fact that – not every investment you make in equities is not going to qualify for tax deduction under 80C. Yes, there are only a selected few stocks which can come under the tax deduction scheme.

Which stocks come under Section 80C?

For all the investors who are looking forward to investing in mutual funds for tax exemption, must know that only ELSS or Equity Linked Savings Scheme do qualify for the tax deduction under Section 80C. Investors can officially claim a deduction up to an amount of Rs.1.5 lakhs under the same section of the Income Tax Act of 1961.

For those of you who are not aware of ELSSs, these are equity mutual fund schemes that can be invested in the stock market. These funds come with a lock-in period of three years which is mandatory. Even though these are much riskier options for investment, they can give you much higher returns when we compare them to other investment schemes like Public Provident Fund, the National Saving Certificate, etc. Many of the stocks under the ELSS category have given over 18.45% returns in the past 5 years which is far more superior than other plans.

All the stocks which are listed under ELSS funds are eligible for a tax-deduction. Other than that, no other mutual funds will be tax deductible. So, you need to make sure to make you invest only on those funds which are eligible under Section 80C. We have discussed a few of them in the next segment.

Mutual funds which qualify for tax benefits

Here are some of the best mutual funds which are listed under the ELSS category and are eligible for tax deduction under Section 80C –

  • Motilal Oswal Long Term Equity Fund
  • Kotak Tax Saver
  • Canara Robeco Equity Tax Saver Fund
  • DSP Tax Saver Fund
  • Aditya Birla Sun Life Tax Relief 96
  • Axis Long Term Equity Fund
  • Mirae Asset Tax Saver Fund

Most of these mutual funds have promised a return of above 10% and went up to 17% as well. Make sure to read more about them before you invest your hard-earned money on them. The mutual fund dividend of these stocks are also promising and helps to accumulate wealth.