The brightest gem in the 80C basket

In spite of the boost given to the new tax regime in the recent Union Budget, tax-saving funds remain a useful option for those opting for the old tax system

The Union Budget for FY24 seems to have disturbed the tectonic plates of the tax-saving landscape. The added sweeteners to the new tax regime have challenged the status quo. Equipping the new system with higher tax rebates and lower tax rates may throw Section 80C investments out of whack.

That said, all these regulations will come into effect from April 1, 2023. So, let's reserve all this talk for another time, for we have a task at hand. That's an all-too-familiar task for those under the old tax order: tax-saving. Currently, the big question on everyone's lips is: which is the best tax-saving option under Section 80C? For us, the answer is relatively straightforward: equity-linked savings scheme (ELSS), also known as tax-saving mutual funds. So, let's assess their importance, recent performance and why they should be a go-to tax-saving option for you.

Investors show the money

Last year, tax-saving funds made a big comeback as investors poured money into them in spades. In fact, these funds received three-year high inflows on the back of gunning out an impressive 32 per cent returns the preceding year. But the strong inflows could be short-lived as many people might just stop investing in tax-saving funds because of the boost given to the new tax regime in the recent Budget.