Investing in mutual funds through a Systematic Investment Plan (SIP) is one of the most popular and effective ways to create wealth over time. SIP investments offer discipline, affordability, and rupee cost averaging, making them a preferred choice for many investors.
In addition to their long-term growth potential, some mutual funds in India also offer tax benefits, making them an even more attractive option in 2025. This guide will highlight the top mutual funds for SIP investment with tax benefits, ensuring that you can make informed decisions for a secure financial future.
Why Invest in SIPs for Tax Benefits?
1. Tax Deduction Under Section 80C
SIP investments in Equity-Linked Savings Schemes (ELSS) mutual funds are eligible for tax benefits under Section 80C of the Income Tax Act. These tax-saving funds allow you to claim a deduction of up to ₹1.5 lakh per year from your taxable income.
2. Capital Appreciation and Tax Benefits
ELSS mutual funds offer capital appreciation potential while providing tax-saving benefits. They are equity-based funds, which means they can provide higher returns than traditional tax-saving instruments like Fixed Deposits (FDs) or Public Provident Fund (PPF), though with higher risk.
3. Lock-in Period of Just 3 Years
One of the key advantages of investing in ELSS mutual funds is the relatively short lock-in period of 3 years, which is lower than most other tax-saving investment options. This allows investors to benefit from tax savings and still have access to their funds after a short duration.
Top Mutual Funds for SIP Investment with Tax Benefits in 2025
1. Axis Long Term Equity Fund (ELSS)
Axis Long Term Equity Fund is one of the most popular ELSS funds that offers excellent returns while providing tax-saving benefits under Section 80C. The fund has consistently outperformed the benchmark and is considered a reliable option for long-term investors.
Key Features:
- Tax Benefit: Eligible for tax deduction under Section 80C.
- 3-Year Lock-in Period: Allows easy access to funds after 3 years.
- Consistent Performance: Excellent long-term returns, beating its benchmark.
- Risk Profile: High risk due to equity exposure.
Why It’s Great:
This fund is a great choice for investors looking to maximize returns while enjoying tax benefits.
2. Mirae Asset Tax Saver Fund
The Mirae Asset Tax Saver Fund is another top-performing ELSS that consistently delivers solid returns. The fund’s focus on high-growth blue-chip stocks makes it a reliable choice for investors seeking both capital appreciation and tax savings.
Key Features:
- Tax Benefit: Deduction of up to ₹1.5 lakh under Section 80C.
- 3-Year Lock-in Period: Ideal for investors seeking medium-term tax savings.
- Diversified Portfolio: Invests in a diversified mix of large-cap and mid-cap stocks.
- Performance: Strong long-term track record.
Why It’s Great:
With its solid performance and diversified portfolio, the Mirae Asset Tax Saver Fund is perfect for investors seeking tax-saving options with potential for higher returns.
3. Aditya Birla Sun Life Tax Relief 96 Fund
Aditya Birla Sun Life Tax Relief 96 Fund is one of the oldest and most trusted ELSS funds in India. With a history of steady returns and a focus on equity exposure, this fund offers both tax benefits and capital growth.
Key Features:
- Tax Benefit: Claim tax deduction under Section 80C.
- 3-Year Lock-in Period: Enables you to access your funds after the lock-in period.
- Long-Term Focus: Aimed at long-term capital appreciation with a focus on large-cap stocks.
- Risk: Moderate to high, due to equity-based investment.
Why It’s Great:
Aditya Birla Sun Life Tax Relief 96 Fund offers a good balance between growth potential and tax-saving advantages, making it suitable for investors with a moderate risk appetite.
4. ELSS Fund by ICICI Prudential
The ICICI Prudential Long-Term Equity Fund is a popular choice for SIP investments, offering high potential returns and tax-saving benefits. The fund focuses on investing in large-cap stocks, making it a safer bet for investors seeking stability and long-term growth.
Key Features:
- Tax Benefit: Claim up to ₹1.5 lakh under Section 80C.
- Diversified Portfolio: Invests across large-cap stocks, with a focus on value investing.
- Performance: A strong performer over both short and long terms.
- Risk Profile: Moderate risk.
Why It’s Great:
The ICICI Prudential ELSS Fund offers a balanced portfolio with a strong track record in delivering tax-saving benefits and steady returns.
5. Franklin Templeton India Taxshield Fund
Franklin Templeton India Taxshield Fund is another top ELSS fund offering tax benefits under Section 80C. With a focus on diversified equity and top-performing stocks, this fund provides a strong option for investors seeking to reduce their tax burden while building wealth.
Key Features:
- Tax Benefit: Tax deduction under Section 80C.
- Diversification: Invests in a broad range of stocks, providing good diversification.
- Performance: Steady returns with a focus on long-term growth.
- Risk Level: Moderate to high, depending on market conditions.
Why It’s Great:
With its steady performance and broad market exposure, the Franklin Templeton India Taxshield Fund is a solid choice for investors looking for a mix of growth and tax-saving benefits.
6. DSP BlackRock Tax Saver Fund
DSP BlackRock Tax Saver Fund offers an ideal combination of growth potential and tax-saving advantages. The fund invests in both large-cap and mid-cap stocks, aiming to balance risk while delivering strong returns.
Key Features:
- Tax Benefit: Claim tax deductions under Section 80C.
- Diversified Portfolio: Invests across sectors, providing better risk management.
- Strong Returns: Known for consistent returns over time.
- Lock-in Period: 3 years for tax benefits.
Why It’s Great:
With a strong track record of returns and tax-saving benefits, this fund is perfect for investors seeking a diversified, long-term SIP investment.
7. Kotak Tax Saver Fund
The Kotak Tax Saver Fund is another highly regarded ELSS fund offering excellent tax benefits and long-term growth potential. The fund primarily focuses on large-cap stocks, ensuring stability while providing investors with tax-saving options.
Key Features:
- Tax Benefit: Deduction under Section 80C.
- Large-Cap Focus: Primarily invests in large-cap stocks for lower volatility.
- Performance: Offers solid returns over the long term.
- Lock-in Period: 3 years, ideal for tax savings.
Why It’s Great:
With its focus on large-cap stocks and moderate risk, the Kotak Tax Saver Fund provides a stable investment choice for long-term tax-saving growth.
8. Tata India Tax Savings Fund
The Tata India Tax Savings Fund is a well-regarded ELSS fund offering tax benefits under Section 80C. Known for its consistent returns and diversified portfolio, it’s an excellent choice for long-term investors.
Key Features:
- Tax Benefit: Claim deductions under Section 80C.
- Diversified Portfolio: Focus on both large-cap and mid-cap stocks.
- Strong Track Record: Steady returns and long-term growth potential.
- Risk Profile: Moderate to high risk.
Why It’s Great:
The Tata India Tax Savings Fund offers a balanced investment approach, making it an attractive option for tax-saving investors.
9. SBI Magnum Tax Gain Fund
SBI Magnum Tax Gain Fund offers excellent tax-saving benefits while focusing on delivering consistent returns. The fund invests in a mix of large-cap and mid-cap stocks, providing a diversified portfolio for investors.
Key Features:
- Tax Benefit: Tax deduction under Section 80C.
- Risk Management: Focus on a balanced mix of large-cap and mid-cap stocks.
- Strong Performance: Known for consistent growth.
- Lock-in Period: 3 years.
Why It’s Great:
SBI Magnum Tax Gain Fund provides strong returns, diversification, and tax-saving benefits, making it ideal for long-term investors.
10. Birla Sun Life Tax Plan
Birla Sun Life Tax Plan is one of India’s most trusted ELSS funds, offering tax-saving benefits under Section 80C. The fund focuses on equity stocks that offer long-term growth potential.
Key Features:
- Tax Benefit: Deduction under Section 80C.
- Equity Exposure: Focus on large-cap stocks for growth with a balanced risk profile.
- Proven Track Record: Consistent returns for long-term investors.
- Lock-in Period: 3 years.
Why It’s Great:
The Birla Sun Life Tax Plan offers an affordable and reliable way to invest for both growth and tax savings.
Conclusion: Best Mutual Funds for SIP Investment with Tax Benefits in 2025
Investing in ELSS mutual funds through SIPs is one of the most efficient ways to build wealth while saving taxes. The funds mentioned above, such as Axis Long Term Equity Fund, HDFC Life Click 2 Protect Life, and Mirae Asset Tax Saver Fund, offer high returns and tax-saving benefits under Section 80C. By investing in these top mutual funds, you can maximize your wealth creation potential while enjoying tax savings, ensuring a more financially secure future.