Equity-linked savings schemes continued to remain relevant under the old tax regime even in 2026, largely because they combine equity exposure with a defined tax deduction structure and a shorter statutory lock-in than most competing instruments.
Performance data reviewed across 5 long-standing ELSS funds shows that long-term outcome diverged meaningfully, with 10-year compounded annual growth rates ranging from 18.04% to 21.51%, demonstrating differences in allocation mix, market-cap exposure, portfolio concentration, and cost structures rather than category-level similarity.
The funds picked were based on the top 5 highest annualised returns in 10 years.
Top 5 tax-saving ELSS funds
#1: Bank of India ELSS Tax Saver Fund Direct Plan
Bank of India ELSS Tax Saver Fund Direct Plan reported a 1-year return of 8.70%, a 3-year CAGR of 18.66%, a 5-year CAGR of 17.41%, and a 10-year CAGR of 18.04%. Over a 7-year period, the fund delivered a CAGR of 20.41%, indicating stronger performance during certain market phases rather than uniform consistency across all periods.
The fund’s net asset value stood at Rs 187.28. Assets under management were Rs 1,402 crore, placing the scheme in the smaller AUM bracket within the ELSS category. The expense ratio was 0.89%. The statutory lock-in period was 3 years, after which no exit load applied. Minimum lump sum and SIP investments were Rs 500 each.
An SIP illustration showed that a total investment of Rs 4,60,000 over 3 years, comprising a Rs 1,00,000 lump sum and a Rs 10,000 monthly SIP, grew to Rs 5,89,130, translating into an Extended Internal Rate of Return (XIRR) of 13.76%.
Bank of India ELSS Tax Saver Fund Direct Plan’s sharpe ratio is 0.75, with a portfolio turnover of 72%.
From an allocation perspective, equity exposure stood at 94.82%, with debt at 1.17% and cash and equivalents at 4.01%. Market capitalisation data showed 62.46% allocated to large cap stocks, 16.81% to midcap stocks, and 20.73% to small cap stocks.
#2: DSP ELSS Tax Saver Fund Direct Plan
DSP ELSS Tax Saver Fund Direct Plan delivered a 1-year return of 13.49%, a 3-year CAGR of 21.49%, a 5-year CAGR of 18.81%, and a 10-year CAGR of 18.28%. The 7-year CAGR stood at 19.50%, reflecting relatively even performance across longer holding periods.
The fund’s NAV was Rs 160.94. Assets under management were Rs 17,609 crore. The expense ratio stood at 0.74%. The lock-in period was 3 years, in line with ELSS regulations, with no exit load applicable beyond that period. Minimum investment and SIP amounts were Rs 500.
The SIP illustration indicated that a total investment of Rs 4,60,000 over 3 years grew to Rs 6,39,718, corresponding to an XIRR of 18.55%.
Portfolio data showed equity exposure of 98.71%, with 1.29% held in cash and equivalents and no debt allocation. Market cap exposure was tilted toward large cap stocks at 68.66%, followed by midcap exposure of 17.30% and small cap exposure of 14.05%.
The fund’s turnover is at 34%, while the Sharpe ratio is 1.06, which is the highest among the 5 funds.
A higher Sharpe ratio indicates a better risk-adjusted return, implying greater risk for potentially higher returns.
#3: Mirae Asset ELSS Tax Saver Fund Direct Plan
Mirae Asset ELSS Tax Saver Fund Direct Plan recorded a 1-year return of 13.99%, a 3-year CAGR of 18.82%, a 5-year CAGR of 16.39%, and a 10-year CAGR of 19.82%. Over a 7-year period, the fund delivered a CAGR of 18.60%.
The NAV stood at Rs 57.10. Assets under management were Rs 27,196 crore, making it the largest fund among those reviewed. The expense ratio was 0.58%, the lowest within this comparison set. The lock-in period was 3 years, with no exit load after completion of the lock-in. Minimum investment and SIP thresholds were Rs 500.
A SIP illustration showed that an investment of Rs 4,60,000 over 3 years grew to Rs 6,13,982, translating into an XIRR of 16.15%.
Equity exposure stood at 98.88%, with cash and equivalents at 1.12% and no debt allocation. Market-cap distribution showed 63.02% in large cap stocks, 17.01% in midcap stocks, and 19.97% in small cap stocks.
The funds sharpe ratio stood at 0.89, with a portfolio turnover of 127%.
#4: Motilal Oswal ELSS Tax Saver Fund Direct Plan
Motilal Oswal ELSS Tax Saver Fund Direct Plan delivered a 1-year return of 5.39%, a 3-year CAGR of 23.71%, a 5-year CAGR of 19.29%, and a 10-year CAGR of 18.47%. The 7-year CAGR stood at 18.99%, while return dispersion was evident across shorter periods.
The NAV was Rs 56.91. The lock-in period was 3 years, with no exit load applicable after that period. While assets under management and expense ratio were not disclosed in the supplied documents, volatility data showed a best annual return of 84.45% and a worst annual return of -27.18%.
A long-term SIP illustration showed that a total investment of Rs 14,20,000 over 11 years grew to Rs 42,36,736, translating into an XIRR of 17.43%.
Motilal Oswal ELSS Tax Saver Fund Direct Plan portfolio turnover was 53%, meanwhile, the Sharpe ratio was 0.88.
#5: Quant ELSS Tax Saver Fund Direct Plan
Quant ELSS Tax Saver Fund Direct Plan reported the highest long-term performance among the reviewed schemes, with a 1-year return of 12.14%, a 3-year CAGR of 18.51%, a 5-year CAGR of 21.76%, and a 10-year CAGR of 21.51%. The 7-year CAGR stood at 24.13%.
The fund’s NAV was Rs 411.67. Assets under management were Rs 12,403 crore, and the expense ratio was 0.75%. The statutory lock-in period was 3 years, with no exit load after completion of the lock-in. Minimum investment and SIP amounts were Rs 500.
The SIP illustration showed that a total investment of Rs 4,60,000 over 3 years grew to Rs 5,84,928, translating into an XIRR of 13.35%.
Equity exposure stood at 95.15%, with cash and equivalents at 4.85%. Market cap allocation was heavily skewed toward large cap stocks at 87.61%, with midcap exposure of 7.21% and small cap exposure of 5.18%.
Quant ELSS Tax Saver Fund Direct Plan sharpe ratio is at 0.62, along with a portfolio turnover of 132%, indicating a strong churn.
Tax treatment under the old tax regime in 2026
Under the old tax regime applicable in 2026, investments in Equity Linked Savings Schemes qualify for deduction under Section 80C of the Income Tax Act, 1961, subject to a maximum limit of Rs 1.5 lakh per financial year. This deduction is available to individuals and Hindu Undivided Families and reduces gross total income for tax computation purposes.
ELSS funds are required to invest at least 80% of their assets in equity and equity-related instruments and carry a mandatory lock-in period of 3 years, which remains the shortest among all Section 80C options.
Other instruments eligible under Section 80C include Public Provident Fund with a 15-year tenure, 5-year tax-saving fixed deposits, National Savings Certificates with a 5-year maturity, employee provident fund contributions, eligible life insurance premiums, Sukanya Samriddhi Yojana deposits, and qualifying principal repayment on home loans.
The combined deduction limit under Sections 80C, 80CCC, and 80CCD(1) remains capped at Rs 1.5 lakh. Additional deductions for National Pension System contributions up to Rs 50,000 are available under Section 80CCD(1B).
Deductions under Section 80C are not available under the new tax regime, making ELSS relevant only for taxpayers who continue to opt for the old regime.
Investors’ takeaway
Across the 5 ELSS funds reviewed, long-term return outcomes were driven primarily by allocation choices, cost structures, and consistency of equity exposure rather than short-term performance rankings.
Lower expense ratios contributed meaningfully to compounding over 7-year and 10-year period, and SIP return data showed that staggered investing reduced outcome dispersion across funds.
With a uniform 3-year lock-in, no exit load thereafter, and identical tax treatment under Section 80C, differences in results ultimately reflected portfolio construction and holding discipline rather than the tax framework itself.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.