All those schemes, which are of at least three years and whose investment is more than 80% in

equities are applicable for tax deduction scheme under section 80c.

Earlier all ELSS schemes used to be EEE (exempt, exempt, exempt). Or amount invested, dividend
earned, and maturity amount all were tax free. This year, government has reintroduced LTCG tax
(long term capital gain). This means from now onwards, income from ELSS will be taxable at 10%, if
dividend earn from ELSS scheme is more than 1 lakh.

Long term capital gain tax includes all those jewellery, debt oriented mutual funds, land, building,
and house property. For immovable bodies, from 2017-18 fiscal years, LTCG includes assets which
are held for period of two years or more. While for jewellery and mutual funds, this term is three
years. Short term capital gain tax is 15%.

Some Parameters:

1. CAGR (compound annual growth rate): annualised growth rate of a fund.

2. P/E Ratio: price to earnings ratio. Say, a stock value in the starting of one year is 95 rs and it
gains 5 rs in that year. It means P/E ratio is 100/5=20. In other words, we are willing to pay
20 rs for company’s earnings of 1 Rs. If P/E ratio is low (<16), that means market is
undervalued and at the time of market correction, its value can go up. While if P/E ratio is
high (>21), that means marker is overvalued and on market correction, its value can go
down. Or people believe a lot on that firm of high P/E ratio mutual fund. High P/E ratio funds
are also called expensive funds.
3. NAV (Net Asset Value): = (asset-liabilities)/ (number of outstanding units).Assets include all
stocks, securities, deposits etc. brought by a company. Liabilities include the day to day
running cost of company. Number of outstanding unit means the total number of units
which are available with investors. Say, an investor goes to buy some part of mutual fund
from 10,000 rs and NAV is 50. Then that investor will get 200 units.

ELSS Schemes:

1. Axis long term equity fund: Managed by AMC Axis Mutual Funds. Managed by Mr. Jignesh
Gopani. Investors can choose to remain invested in the scheme after three years. Opened on
29th December 2009. No entry or exit load. High risk because of high equity exposure.
Plan available in case of Axis Long Term Mutual Funds are the Regular Plan and the Direct
Plan. In case of a regular plan, the investor invests in the mutual fund through a third-party
such as a broker who processes the request on the investor’s behalf and forwards it to the
AMC in question. In this case, additional brokerage charges may be applicable at the time of
investment as well as at the time of redemption. On the other hand, in case of direct plans,
the investments are made directly with the Axis Mutual Fund AMC thus ensuring that no
extra brokerage charges etc. are applicable in such investments.
Option: one is Dividend option. In this whenever Axis AMC declares dividend, payouts are
given to investors. While in second option: “Growth option”, there is no payout and
dividend gets added up in principal.
CAGR: 22% (3 year), 25% (5 year).
2. Franklin India Taxshield: 80% of its investments in giant and large-cap companies.
CAGR: 24% (CAGR) return since its Launched on April 10, 1999. 20 % (CAGR) and 17% (CAGR)
return over the last 3 and 5 year period respectively.
3. DSP BlackRock Tax Saver Fund: Managed by DSP Blackrock. 68% of its investments in large
cap companies. Strong focus on good companies with attractive valuations and strong
 growth potential. DSP Blackrock Tax Saver Fund has almost 96% of its assets allocated to the
equity market (20% investment is in banking sector). SEBI has set rules and regulations
under which mutual funds cannot charge their customers with entry load. As is the case with
any ELSS fund, there are no exit loads as the lock-in period is of 3 years.
CAGR: grown at around 13.87% return (CAGR) since its launch date of January 18, 2007. It
has delivered about 22% (CAGR) and 19% (CAGR) over the last 3 years and 5 years
respectively.
4. Reliance Tax Saver Fund: Mr. Ashwani Kumar is the manager (Management degree in
Finance from IIM, Bangalore.) Primarily focuses on mid- and small-cap companies (55%). In
the case of systematic investment plan (SIP) investments, the minimum size of each SIP
investment is Rs. 500 for a period of at least 12 month.
The Reliance SIP Insure scheme is an innovative plan introduced by Reliance Nippon AMC to
promote SIP for investments into the scheme. In this scheme, if you are opting for SIP, then
you are eligible for life insurance scheme.
CAGR: over 14% (CAGR) returns since its launch date of September 21, 2005 and has
generated about 26% and 21% (CAGR) returns over the last 3 year and 5 year periods.
5. ICICI Prudential Long Term Equity Fund: 50% of its portfolio is invested in mid-cap and
small-cap companies; its focus on attractive valuations will reduce its risk from market
corrections.
CAGR: over 21% (CAGR) returns since its launch date of August 19, 1999. The fund has
outperformed its benchmark (Nifty 500) in 13 of the last 15 years and has delivered over
18% and 17% (CAGR) returns during the last 3 and 5 year periods.
6. Birla Sunlife Tax Relief 96: Invest 80–100% of its portfolio in equities and the rest in debt
and money market instruments. Around 47% of its portfolio invested in giant and large-cap
companies and the rest in mid- and small-cap companies.
CAGR: Generated over 25.34% (CAGR) return since its launch on March 29, 1996. 21% and
18% (CAGR) returns over the last 3 and 5 years period.
7. Invesco India Tax Plan: Large and giant-cap companies form 70% of its portfolio while the
rest 30% is held in mid-cap and small-cap companies.
CAGR: This fund was launched on December 29, 2006 and has delivered over 13% (CAGR)
returns since then. Delivered over 20% and 17% (CAGR) returns over the 3-year and 5-year
period.
8. Principal Tax Savings: 57% of its portfolio is held in giant and large-cap companies while the
rest are in mid-cap and small-cap companies.
CAGR: over 19% and 18% (CAGR) returns over the last 3 year and 5 year periods.
9. Tata India Tax Savings: 44% of its portfolio is invested in large and giant cap stock.
P/E ratio: high portfolio P/E multiple of 26 carry a significant downward risk to this fund
CAGR: Over 19% (CAGR) since its launch on March 31, 1996. Over 21% and 16% (CAGR) over
the last 3-year and 5-year period respectively.
10. IDFC Tax Advantage: About 43% of its holdings in giant and large-cap space and the rest in
mid-cap and small-cap companies
CAGR: Launched on December 26, 2008 and has generated 18.65% (CAGR) return since
then. around 17% (CAGR) in both 3 years and 5 year period,

Summary:

Franklin India Taxshield Fund has 80% large cap market capitalization. Others at 70% large cap
market capitalization include Axis Long Term Equity Fund, DSP BlackRock Tax Saver Fund, and
Invesco India Tax Plan. Highest 1 year and 3 year returns are of IDFC Tax Advantage (ELSS) Fund and
highest 5 year return is of Axis long term equity fund. Others doing good include Principal Tax
Savings, Birla Sun Life Tax Relief 96