Best ELSS Funds for FY 2025-26: Tax Saving with Equity Returns
By Nitish Bharadwaj · Published May 30, 2026 · 4 min
ELSS mutual funds offer Section 80C deductions up to ₹1.5 lakh with a three-year lock-in — the shortest among 80C instruments — and equity-linked returns that historically exceed PPF and NSC over longer horizons. This guide ranks the top ELSS funds for FY 2025-26 by five-year rolling returns, expense ratio, and downside capture, and explains how to split the 80C allocation between ELSS and other instruments based on risk appetite.
ELSS (Equity Linked Savings Scheme) is the only 80C investment that gives you equity returns, a 3-year lock-in (shortest in 80C), and tax-free long-term capital gains up to ₹1.25 lakh. Here are the best ELSS funds for 2025-26.
| Fund | 3-Year Return | 5-Year Return | 10-Year Return | AUM |
|---|---|---|---|---|
| Mirae Asset Tax Saver | 18.5% | 22.1% | 20.3% | ₹22,000Cr+ |
| Parag Parikh Tax Saver | 21.2% | 23.5% | N/A (newer) | ₹3,500Cr+ |
| DSP Tax Saver | 16.8% | 20.2% | 18.1% | ₹12,000Cr+ |
| Axis ELSS Tax Saver (ex-Axis Long Term Equity) | 13.1% | 17.8% | 17.2% | ₹28,000Cr+ |
| SBI Long Term Equity | 19.3% | 21.4% | 16.5% | ₹18,000Cr+ |
Our Top Pick: Mirae Asset Tax Saver
Consistent performance across market cycles, moderate risk, strong large-cap bias, and one of the highest AUMs in the category (lower fund manager risk). Suitable for first-time ELSS investors and those who want consistent compounders over star-performance.
Frequently Asked Questions
What is the lock-in period for ELSS funds?
ELSS funds have a 3-year lock-in from the date of each SIP instalment. For a monthly SIP, each instalment has its own 3-year lock-in. So if you invest via SIP for 12 months, you get partial liquidity every month after the first instalment completes 3 years.
Is ELSS better than PPF for 80C tax saving?
ELSS has historically delivered 16–22% CAGR over 10 years vs PPF's fixed 7.1%. The tradeoff is market risk and a 3-year lock-in (vs PPF's 15). For investors under 40 with a 10+ year horizon, ELSS typically beats PPF on post-tax returns. PPF suits those near retirement or with very low risk tolerance.
Can I claim 80C on ELSS invested via SIP?
Yes. Each SIP instalment in an ELSS fund qualifies for 80C deduction in the financial year it is invested. Invest ₹12,500/month via SIP from April to March — the full ₹1.5 lakh counts toward your 80C for that financial year.
What is the LTCG tax on ELSS after 3 years?
Gains on ELSS above ₹1.25 lakh in a financial year are taxed at 12.5% as Long-Term Capital Gains. Gains up to ₹1.25 lakh are tax-free. For most retail investors redeeming SIP instalments, annual gains rarely exceed this threshold, making ELSS effectively tax-free in practice.