Best Tax Saving Funds

When it comes to Tax Saving and ELSS Funds I prefer to invest in funds where I get maximum dividend and that way I do not need to invest my full amount and also get the Tax benefit of full amount invested. Read how if you still have not read – Full tax saving without investing one lac. Now many people ask me about how to know the dividend history of funds and so for them I have Dividend History of Mutual Funds.

So now using the methods discussed in the above two articles I would list some of the best Tax Saving funds. The list of funds I have selected are based on criteria of consistent dividend for a longer period of time.

Birla Sun Life Tax Relief 96

Best Dividend ever by any Tax saver fund I know off.

Record Date Rate of Dividend
Jun 27, 2008 50 %
Mar 25, 2008 200 %
Mar 16, 2007 500 %
Jan 19, 2007 260 %
Dec 8, 2006 250 %

Principal Personal TaxSaver

One more best dividend Tax saver fund I know off. Principal Personal TaxSaver has given probably the best dividend in the most difficult time.

Record Date Rate of Dividend
Mar 25, 2008 400 %
Feb 26, 2008 200 %
Dec 31, 2007 110 %
Oct 30, 2007 110 %
Mar 13, 2006 100 %

SBI Magnum Tax gain

Yet another fund by SBI Mutual Fund house which has very good track record when it comes to return as well as dividend.

Record Date Rate of Dividend
May 29, 2009 28 %
Feb 15, 2008 110 %
Mar 2, 2007 110 %
Mar 10, 2006 150 %
Jun 10, 2005 102 %

HDFC Tax Saver

Not into one of the best dividend rate like above funds but very consistent when it comes to dividend and also return of this fund is also worth investing.

Record Date Rate of Dividend
Mar 6, 2009 50 %
Mar 7, 2008 80 %
Mar 8, 2007 75 %
Mar 17, 2006 75 %
Feb 17, 2005 50 %

Canara Robeco Equity Tax Saver

Not as good as above ones, but best when it comes to return of the fund.

Record Date Rate of Dividend
Mar 28, 2008 30 %
Mar 15, 2007 60 %
Mar 16, 2006 40 %
Mar 18, 2005 25 %
Mar 26, 2004 15 %

Apart from the above old funds I also expect some good returns for some of the new tax saving funds which till date have not recorded good dividend but that is may be because of the current market situation for last one year or so and so they deserve mentioning.

Fidelity Tax Advantage

Record Date Rate of Dividend
Mar 13, 2008 15 %

DSP Blackrock Tax Saver

Record Date Rate of Dividend
Feb 29, 2008 36 %

Kotak Tax Saver

Record Date Rate of Dividend
Feb 8, 2008 35 %
Feb 20, 2007 30 %


  1. karan says


    I want to invest for long term for my children
    how is hdfc equity fund G and hdfc mid cap ooportunity fund


  2. kunal says

    HI Sir

    I have invested in LIC jeevan saral policy for which I am paying 50000/- a year premium plus invested in PPF, now I want to invest in some SIP as I feel they are better off than LIC, can you please suggest some SIP ( non tax saver) , I want to invest in long term



  3. Samrat Bhattacherjee says

    I want to invest in TAX saver fund as SIP. Can u suggest some good funds where I can invest so that after a locking period of 3 years I can a good return. I have some idea in Reliance Tax Saver SIP, HDFC Tax saver SIP, Franklin Tax Saver SIP. Pl tell me about those funds performance. I fthose r not good then pl suggest some good Tax Saver Fund so that I can start my SIP.

  4. Naveen says

    Hi Shabbir,
    I had lost 28k last year as IT. I don’t want the same to happen the next time as well. Already the tax cut has started for this year to the tune of 3.5k P.M.So if you were in my shoes, what would you do ? Is it the right time to invest in ELSS (Canara Robeco (D)). Now if i check the NAV, it was around 26 in 2008, went to 9 in 2009 and now 16.5. What does these mean ? Does the dividend payout compensate ? During which time is it prudent to enter and when to exit ? Usually do you exit the fund after the 3 yr lock in period ? Any advice in this regard is most welcome.
    Thanks in advance.
    Good Day..

    • says

      Hi Naveen,

      I would never do lumpsum investment unless I had to and so if you can start now, you should opt for a SIP in ELSS. NAV is the price of the per unit of fund and it means how fund has performed over time.

      Yes I do exit the fund immediately after the lock in period because I invest in those funds to merely save tax and nothing more.


  5. babu says

    Hi Shabbir,

    I am a novice person in investment in mutual funds. I am planning to investment amount(Rs.20000) in tax saver mutual fund. As per the current trend and previous performance which bank i can approach to get reliable return of investments in the long run? Pls share your thoughts on this.

  6. shamim says

    Hi Shabbir,

    I have never gone for tax saving yet, and i have no clue what to be done, now that i want to, can you suggest me how to do it? i do not have any kind of tax saving, the only thing i have is my PF under 80C, so need your suggesstion to plan from this year..

    Thanks in Advance


  7. Gajanan says

    Shabbirji, obviously, investment objective is same to book profit min 15%, and wait for further deep, and enter again.
    Because Within these three years so many time My portfolio was on profit but oweing to market fluctuations I could not get profit finally, so I have decided to book profit when market at higher level and switch to liquid funds.
    Actually I want to know from your end that, in MF if I use same strategy, to book small profit which you suggested in your book, will this do?

  8. gajanan says

    Hi Shabbirji

    I read your book and now at least my personal perceptions about any stock after analysis is near to my conclusions.

    Thanks for Technical analysis BOOK.
    Recently I draw SIP of HDFC Tax saver How is it & second question is in I read that Reliance Growth MF is not performing well so I switched that investment to IDFC Opportunity Fund Growth. How was the decision?

    • says

      Gajanan, HDFC Tax saver is good choice. Reliance MFs have lost their charm and so I think you did the right thing of switching but I am not sure IDFC is the right choice because it depends on your investment objective and time frame of your investment.

    • says

      Yes I have read that post by Manish but I also see the Rajiv Gandhi Scheme is in place and so ELSS is not an option. This is my understanding but I think I will ask my CA once I am done with the year ending stuff.

  9. kedar says


    Which one among the following MF’s is good for SIP.

    Fidelity Tax Advantage Fund
    HDFC Tax Saver
    Canrebecco Eqty TaxSaver

  10. Satz says

    Hi Shabbir,
    i am conflicted between SBI TAX Advantage Fund – Series II(new fund) and Canara Robecco tax saver fund. please suggest if i shd go for a new fund or an old tested and tried one.

  11. Mothilal says

    Hi Shabbir,

    Thanks for the lot of information sharing. Please suggest me, whether its good to opt for TIP(Target Investment Plan) investment instead of investing in SIP (Systematic investment plan). Please guide me.


  12. Radhika says

    I’ve invested in the following tax savers since 2007:



    My lock-in period is complete. I was hoping to receive advice on liquidating and re-investing, this time to earn good returns as opposed to tax gains. Your insights will be appreciated.

    Thank you

      • Radhika says

        if by ROI, you mean Rate of Interest, clearly it’s very poor now. I invested when the market was at its peak (almost) and it hardly went back to those levels. Do you suggest for me to wait till I can reap benefits and then exit?

        As for the outlook, I am comfortable with longer terms. But it hasn’t worked too well for me :)
        Is there a way for me to make good returns elsewhere, short term – and possibly experiment later. I am just anxious because of waiting this long and receiving practically nothing in return.

        • says

          ROI I meant return on investment but it means same things here. No I cannot comment on whether you should wait or not because it depends on lot of other parameters like your risk appetite.

          Longer or shorter term does not matter and you should be buying at the right time and at the right price.

  13. Rupinder says

    I had invested 25000 in Tata Indo global fund ,,after 3 years still fund value is very low…wht u say…..abt future abt this fund

  14. Vicky says

    So in simple words.. after investing 1000 PM for three years. i have invested 36,000 and after three years suppose unit price is 150 and overall i have 300 units. So it means that when i will took my money out from the fund after three years i would get .. 45000 in my hand. ( i didn’t considered the charges or exit load )

  15. Vicky says


    but if suppose i am invesing 1000 PM so for that particular month i purchased 10 units as an example (Suppose 1 unit price is 100).
    In the nest month unit price is 50 and as per my SIP i purchased 20 units. So my total units are 30 and in the third month unit price is again back to 100. so my total investment is something around 3000 and my profit is 1000 so total would be 4000 .. pls correct me if i am wrong .. it’s littile bit .. frustrating question for professionals like you .. but as i am completely new to everything and i don’t even know the basics about it .. so i am just trying to simplify it .. :)

    • says

      Vicky, you are correct. You have 40 units and as the current price is 100 your investment of 3000 is 4000 but remember in the second month when you purchased it at 50 Rs your actual 1000 Rs was 500 Rs and so a loss of 500. Don’t miss that part as well. :D

  16. Vicky says

    Hi Shabbir,

    I am new to everything. Market-Mutual Fund – Dividend – SIP – Equity … what my concern is i invested 1000 in HDFC Tax Saver, It’s SIP .. does that mean i must have to invest 1000 pm ?
    my another question is, as i am investing 1000 PM, so how my returns would be calculated and after three years how much amount i would get.
    Please explain me in simple way.

    • says

      SIP means systematic investment plan which means you invest some amount after a predetermined interval usually a month.

      How much you would get depends on how your fund has performed and no one can predict as of now Vicky.

  17. varaprasad says

    Hi Shabbir,
    I want to invest 10000.kinldy let me know the secure options
    some things that I come across like
    1.ULIPS + insurance cover (HDFC,AVIVA)
    3.NSC, PPF
    please throw some light on insurance ULIPS

    Am moreover looking for short term returns.


    • says

      Varaprasad, For Ulips see this and let me know if you have more questions about it.

      BTW I don’t think Insurance as an investment options and you can see why here

      NSC and PPF are more related to debt products and for debts I would prefer Liquid plus funds which means I can get my money in few days if I need them but for NSC and PPF it is very long locking period.

  18. Gopish says

    Hi Shabbir,
    Read your posts and comments, and I can say from a novice now I have some knowledge about ELSS. Thanks for that :)

    I want to invest Rs.6000/- per month as SIP in 3 tax saving mutual funds(Rs.2000/- each). Please suggest me the funds for which I should go for. Also Is SIP a good option to go for or is 1time investment better?

    • says

      Gopish, at this moment SIP is better because you have lot of time left for tax saving. Now coming back to doing SIP in three funds I personally don’t do it that way and I normally invest for tax saving in a given fiscal in one fund because having 3 funds does not give you any additional benefit.

  19. Anand Kumar says

    Hi shabbir,

    Thanks for you reply any way i will continue my searching.

    one more question :

    Do have any idea about diversified Equity funds or any funds which may give good returns compare to FD this is not for tax excemption. this is for normal investment plan with risk.Can you name few.

    Or else as you know FD rates are good.canara bank is giving 10.50% for senior citizens for a period of 8 years so investing on my fathers name is good option as he is senior citizen and his monthly income is very less.So there willbe no tax on intreset earned.
    Please suggest.

    Thanks ,

    • says

      Anand, in my free ebook I have mentioned 13 of the better funds for investment and FD is not an investment option at all according to me because 10.5% is not what I even consider as a return on investment.

  20. Anand Kumar says

    Hi Shabbir,

    Thanks for you reply .

    I am 28 years old and not married.
    My income comes under 10 % Tax bracket.My Allocation for tax saving is For 1,20000.00 is below

    RS.60,000.00— In ELSS funds
    RS:20.0000— EMPLOY PF
    RS:5000.00— For charity and social welfare to registered NGO .
    RS:15.000—– (Not sure where to invest in FD,PPF or any other Fund which is less risky .I donot Know much about debt funds please suggest few fund names so that i can do some reasearch and invest.Which will give tax benifit too.)

    Rs: 20.000— Infrastrucutre bonds(..still thinking not yet taken decision)

    Regarding Insurance. A part from company provided insurance and mediclame policy (which is good amount) i donot have any personal insurance for me.That is the reason i went for Future anand policy. As i said i am not an expert in finance .. i donot know my decision is corret or wrong by investing in future anand plan.

    At present insurance is not my top priority. I am looking for a fund which will give standard returns with less risk and which is also eligible for tax excemption.

    Dear all feel free to comment and provide you advise.


    • says

      Anand, I am also not an insurance guy but mainly tech guy like you but I think looking at your situation any good Insurance is good and if you see the benefit in FG insurance you can go with it.

  21. Anand Kumar says

    Hi Shabbir,

    Yes the link is correct.I know some times comparison will not work.
    Still i want to know is it better plan compared to normal FD? as you know intrest earned on FD is taxable and you won’t get insurance in FD.My purpose of this investment plan is fixed returns with minimum risk.As i already done my investment in gold and ELSS funds and considering investing in this plan is a risk free investment.One more thing in the same link can you please check Saral Anand Plan aslo.Agent told me first Saral anand plan then now he is telling Anand Plan is good and in my docuemt it is mentioned as Anand plan and i came to know that he confused me between Future Anand plan and Future Saral Anand Plan.
    Conclusion: insurance agents are professional liers this is my personal experience.When i called the support team of future genarali got the answer saying customer should read before signing the document.How can a noraml customer will know about insurance and how can he know the agent is professional lier.
    An educated IT professional like me got fooled by agent i am thinking what is the situvation in rural india where a layman donot know much about calcualtion and easily trust this agents..



    • says

      Anand, In the link I am not sure I am able to understand the concept of investment. i.e. what is the investment area like Equity and what percentage of investments are in equity and where else the plan invests.

      Now about you being fooled by agent is not one of kind and you are given the plan that makes the most to agent and not most to you. See this

      Now can you tell me your allocation percentage as well as the investment area and I can suggest what you should be doing. On a general note if you are not looking for insurance I will advise you to make an investment in some Debt or liquid funds but if you are looking for insurance you can be into this scheme if you have an allocation around 80%

  22. Anand Kumar says

    Hi Shabbir,

    Thanks for your reply.
    I have read your previous article about investing in insurance as you provided the link. It is really good article thanks to you and Sachin for expressing your views.
    I am just asking about your view on Future Anand Plan (Not about insurance)can you please tellme why it is not good plan i mean to say express your opinion.I have done remaining investment in ELSS funds (canara rebeco and ICICI tax paln growth)so i am looking for safe investment which will give me stable retun.Please suggest.
    Finally I am a Layman not expert in finance and insurance so asking the same question again ..:)


  23. Anand Kumar says

    Hi Shabbir and All ,

    Thanks for shareing your knowledge and Views .

    My age is 28 and i not married(now a days it is difficult to find a Girl..:)
    I have invested in Future genarali – future Anand plan RS.10000. Term is for 15 years.As the agent told it is insurance cum investment plan with guranted returns(eligible for tax excemtion).Please letme know is it good investment cum insurance plan.Still i have 15 days to cancell this plan.
    One Small sugesstion for all Please please donot trust insurance agents please do research and invest. I have trusted the agent and now i am suffering .. But will fight and get back my hard earned money.


  24. mayur says

    hello, i want to know which is good online bank for connecting it with sharekhan and offers good service, customer support– axis bank / hdfc bank?? how is icici ?which one do u reccomend,
    thanks in advance!!!

  25. Sarat says

    Hi Shabbir,
    I have further researched and found that canara robeco is the best fund. Does this fund also have a lock in period of three yrs to get tax benefit. And b the way it would be great if u could suggest me where to buy this fund.

    • says

      Sarat, yes this fund has a locking period of 3 years. Infact all ELSS funds have a locking period of 3 years to get tax benefits.

      For your question about to buy the funds, I will suggest you should use your broker’s online interface but if not see the branches of the fund and try visiting it.

    • venkat says

      Hi Sarat,

      I am sub agent and I will deal with all mutual funds — tax saving, equity,ETF,MIP etc., In case if you are interested to Buy Canara Robeco Mutual Fund, please contact me @ 9241545354 or send me an mail on

  26. Sarat says

    Hi Shabbir,

    I feel the Reliance ELSS fund is good. Bcoz if u go for a lock in period of 3 yrs, u will get tax benefis and also the fund has done pretty well in the last 3 yrs. Pls correct me if i am wrong.

  27. Sabyasachi Das says

    I want to invest INR 72000 in tax saving mutual funds. Can you please tell me how many funda I should select, which all funds, how much money i should invest in each funds? URGENT

  28. says


  29. anand rai says

    15% of your portfolio.Thats a lot. But I was not aware Canara RF had major equity investment. I though 50%-50% equity/debt. So are there any Tax Savers that are More in Debts then equity. Please suggest.

    • says

      I don’t think 15% is a lot but I think that is the minimum at any time for me. Now about ELSS funds you have to find yourself where they invest but normally they are in equity in major.

  30. anand rai says

    Hi Shabbir,

    FYI..I purchased Canara RF on 21st Jan.@.Nav – Rs 21.45…but it is already at Rs 19..I am down of around 10K in my fund value in 8 days..anyways..Iam a long term invertor :-)

  31. Shadab says

    Hello Shabbir,
    I want to save tax but not from assured returns (like LIC, PPF, NSC, Debt Funds etc.) So, I am thinking to invest in mutual funds for tax saving purpose as well as to make money, but I can’t take any assured return.
    Kindly suggest me the best mutual funds for both the purposes but keeping in mind the restrictions.

  32. Girish says

    Hi Shabbir,
    Last year, I had invested in tax saving funds based on your above article. Thanks for providing nice information to learner like me.
    This year also, I want to invest in ELSS funds. But as per my understanding this time picture is different as funds like SBI Magnum Tax gain and Principal Personal TaxSaver lost there creditability. Please correct me if I am wrong,
    I have short listed below funds:
    a)Fidelity Tax Advantage
    b)HDFC Taxsaver
    c)Canara Robeco Equity Tax Saver
    d)ICICI Prudential Tax Plan

    Could you please let me know your opinion on this?
    Thanks in advance.

  33. anand rai says

    Thanks Shabbir,

    I went ahead and purchased, Sundaram/Icici Pru Tax saver.
    What do you think of these funds. Per history they have good returns on 5yrs avg.

    And just for FYI as your does next 1-2 yer project for Sensex/Nifty.

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