HDFC ELSS Tax Saver: Twin benefit of wealth creation and tax saving at shorter lock-in period

In terms of tax-saving investments, Equity Linked Saving Scheme (ELSS) — in the form of schemes like HDFC ELSS Tax saver fund — have emerged as an investment offering investors dual benefit of tax saving and potential wealth creation. 

What are ELSS funds?

Investments made in ELSS schemes are eligible for deduction up to Rs 1,50,000 per annum (alongwith other prescribed investments) under old regime as per Section 80C of The Income Tax Act, 1961. 

While investors who opt for the new regime under Section 115BAC of The Income Tax Act, 1961 may not enjoy the tax exemptions under Section 80C, the 3-year lock-in period of the scheme ensures that investors stay invested for a long-term in spite of short-term volatility in equity markets. 

However, the lock-in period for ELSS (3 years) is still lower than other conventional section 80C eligible investment options like PPF, NSC or Tax Saving FDs.

HDFC ELSS Tax saver: Benefits

HDFC ELSS Tax saver follows a research-driven investment process ably supported by an experienced in-house research team covering over 400 stocks. 

The Fund’s investment philosophy revolves around investing for the long term in quality companies at reasonable valuations. 

The fund invests in fundamentally strong companies with growth drivers in the medium to long term and those that are competitively placed in an industry with good prospects.

Diversification across sectors and themes, coupled with a sharp focus on company fundamentals and valuations, are the key pillars of the fund's strategy to sustainably create wealth through a disciplined and scalable process.

Investing Rs 10,000 in HDFC ELSS Tax saver on March 31, 1996, would have grown to Rs 28,99,345 as of February 29, 2024, at a CAGR of 22.50 per cent. 

Investors can opt for lump-sum investments or SIPs, starting as low as Rs 500 per month. This offers ample flexibility to investors.

Talking about ELSSs, Roshi Jain, Senior Fund Manager, said, “HDFC ELSS Tax saver underscores a combination of disciplined equity investing and HDFC AMC’s unwavering commitment to delivering long-term value to investors. With a track record of almost 28 years, the journey not only highlights the potential of tax-saving investments for wealth creation but also reaffirms our dedication to our fundamentals-based investment philosophy”

Navneet Munot, MD & CEO HDFC AMC, said, "Sound Investment + Time + Patience has been the time-tested principle for wealth creation in equities. HDFC ELSS Tax saver, with a track record ofalmost 28 years bears testimony to this. The benefit of tax saving, in addition to potential for wealth creation and diversified portfolio,makes this fund a smart investment choice; and it is truly a key spoke in the wheel of our mission to be the wealth creator for every Indian."

(Disclaimer: Past performances may or may not be sustained in future and are not a guarantee of any future returns.)