ELSS Calculator
ELSS Calculator
Investing in Equity Linked Saving Schemes (ELSS) offers double benefits: potential
wealth creation and tax savings. But how much will your investment grow?
What tax deduction can you expect?
An ELSS calculator provides valuable insights to answer these questions and guide
your investment decisions.
I am Current Age Is Requiredyears old. My current investment in saving schemes under 80(C) is Corpus Amount Is Required. I would like to start investing from for the current financial Year
Start a SIP of ₹ 88,071 monthly or invest ₹ 1,24,89,690 as a lumpsum to save ₹ 56565656 on tax deductions.
How would you like to invest?
SIP Investment
Lumpsum Investment
Disclaimer: The calculators are for illustrative purposes only and do not reflect actual returns since Mutual Funds do not have a fixed rate of return.
- Surcharge on income above 50 lakhs is not considered for above computation.
- Individuals having total income not exceeding Rs. 500,000 can avail rebate of lower of actual tax liability or Rs. 12,500.
- In case of a resident individual of the age of 60 years or above but below 80 years, the basic exemption limit is Rs.300,000.
- In case of a resident individual of age of 80 years or above, the basic exemption limit is Rs 500,000.
- Health and Education cess @ 4% on aggregate of base tax and surcharge.
- The above computation is basis the old Personal tax regime for resident Individuals.
- Income tax benefts to the mutual fund and unit holders will be based on prevailing tax laws
- The information mentioned above is for general information and understanding purposes only and should not be construed as legal/tax /investment advice in any manner. Investors should consult their own tax consultant / financial advisor to understand specific tax implications arising out of their investment in Equity Linked Savings Schemes (ELSS). ELSS or tax saving mutual fund schemes help investors (Individuals / HUF) save tax under Section 80C of the Income Tax Act, 1961. Investments in ELSS are subject to a lock-in period of 3 years and qualify for a tax deduction of up to Rs 1.5 lakh
What is an ELSS Calculator?
The ELSS calculator is a valuable financial tool for investors. It aids in understanding equity-linked savings schemes by providing a quick estimate of potential returns and tax benefits. Simply input your investment details, like the investment amount, investment type (SIP or lumpsum) to explore different scenarios, calculate tax savings under Section 80C, and align your investments with financial goals.The ELSS calculator helps both experienced and novice investors make informed decisions, ensuring they leverage the benefits of the fund effectively.
How Much Tax Can You Save By Investing in ELSS Fund?
Equity Linked Saving Schemes or ELSS are a popular tax-saving investment option. But what exactly are the tax benefits? Let's break it down.
Tax Deduction under Section 80C: ELSS investments qualify for a tax deduction under Section 80C of the Income Tax Act, 1961. This means you can reduce your taxable income by the amount you invest in ELSS funds, up to a maximum of Rs. 1,50,000 per year.
Considering an annual income of Rs. 16,00,000, let's see how ELSS helps with tax savings.
Scenario 1: Without ELSS
| Income Slab | Taxable Income | Tax Rate | Tax Amount |
|---|---|---|---|
| Rs. 2,50,000 | Nil | Nil | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | Rs. 2,50,000 | 5% | Rs. 12,500 |
| Rs. 5,00,000 to Rs. 10,00,000 | Rs. 5,00,000 | 20% | Rs. 1,00,000 |
| Rs. 10,00,000 to Rs. 15,50,000* | Rs. 5,50,000 | 30% | Rs. 1,65,000 |
| Tax Liability | Rs. 2,77,500 | ||
| Cess @4% | Rs. 11,100 | ||
| Total Tax Liability | Rs. 2,88,600 | ||
Scenario 2: With ELSS
| Income Slab | Taxable Income | Tax Rate | Tax Amount |
|---|---|---|---|
| Rs. 2,50,000 | Nil | Nil | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | Rs. 2,50,000 | 5% | Rs. 12,500 |
| Rs. 5,00,000 to Rs. 10,00,000 | Rs. 5,00,000 | 20% | Rs. 1,00,000 |
| Rs. 10,00,000 to Rs. 14,00,000* | Rs. 4,00,000 | 30% | Rs. 1,20,000 |
| Tax Liability | Rs. 2,32,500 | ||
| Cess @4% | Rs. 9,300 | ||
| Total Tax Liability | Rs. 2,41,800 | ||
Tax Savings with ELSS:
By subtracting the total tax liability with ELSS (Scenario 2) from the total tax liability without ELSS (Scenario 1), you get the tax savings:
- Tax Savings (Rs. 2,88,600 – Rs. 2,41,800) = Rs. 46,800
Key Takeaway:
Investing Rs. 1,50,000 in ELSS can potentially save you Rs. 46,800 in taxes (including cess). This is because ELSS reduces your taxable income, thereby lowering your overall tax liability.
ELSS not only offers tax benefits but also the potential for long-term capital growth through equity investing. However, ELSS funds come with a lock-in period of 3 years. Investing in ELSS is a smart way to save on taxes and grow your wealth for the future. Use our ELSS tax calculator to know the potential tax savings based on your income.
How Can an ELSS Calculator Help You?
An ELSS calculator is primarily designed to help you estimate the returns on your ELSS investments. Beyond that, it serves several other purposes:
-
Allows you to visualise the impact of ELSS investments on your tax liabilities.
-
Allows you to compare expected returns from different ELSS funds.
-
Identifies potential differences between returns from SIP and lumpsum methods.
-
Illustrates the long-term wealth creation potential of your investment.
-
Aids in financial planning, helping you decide the necessary investment for achieving your desired corpus.
How to Calculate ELSS Maturity Amount?
The formula for calculating your ELSS maturity amount is FV = C(1+r)^t
Where:
FV - Future value of investment
C - Initial investment amount
r - Expected rate of return
t - Tenure
Let us illustrate this with an example:
Assuming you invest a lump sum of Rs. 3 lakhs in an ELSS fund with an anticipated rate of return
of 12% over seven years, the maturity amount could be approximately Rs. 6,63,204.
Similarly, initiating an SIP of Rs. 6,000 monthly for seven years at an expected rate of return
of 12% might yield around Rs. 7,91,874 at the end of the tenure.
It is crucial to recognize that the future value can fluctuate based on various factors, so
consider these results as estimates rather than guarantees.
Examples of ELSS Funds Calculation
Understanding the formula mentioned above becomes clearer through the following illustration:1. ELSS Lumpsum Calculation
Investor: Mr. Kumar
Lump Sum Investment: Rs. 80,000
Investment Duration: 5 years
Expected Return Rate: 12%
Result: According to the calculator, Mr. Kumar's investment is expected to grow to Rs. 1,40,986 at maturity.
2. ELSS SIP Calculation
Investor: Ms. Priya
Monthly SIP: Rs. 1,500
Investment Tenure: 3 years
Expected Annual Return: 10%
Result: As per the calculator, Ms. Priya's SIP is estimated to yield Rs. 63,195 at maturity.
Advantages of ELSS Calculator
User-Friendly Insights
The calculator provides a simple process for users to input investment details and receive instant insights into potential returns and tax benefits.
Scenario Exploration
Investors can experiment with various investment scenarios, adjusting parameters like investment amount and tenure to understand the outcomes.
Tax Savings Computation
The calculator precisely calculates tax savings under Section 80C, offering a clear picture of the potential benefits of investing in equity-linked savings schemes.
Informed Decision-Making
Both seasoned and amateur investors can make well-informed decisions by visualizing the impact of different investment choices on returns and tax liabilities.
Financial Goal Alignment
ELSS calculators help align investments with financial goals, ensuring a strategic approach to tax-saving investments.
Related Calculators
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Calculate NowFrequently Asked Questions
Is ELSS taxable after 5 years?
The taxability of ELSS funds after 5 years depends on what you're referring to: However, in general, after 5 years,
-
The initial investment (up to Rs. 1.5 lakh) remains tax-deductible under Section 80C.
-
Long-term Capital Gains (LTCG) up to Rs. 1 lakh is tax-free.
-
LTCG above Rs. 1 lakh is taxed at 10%.
Is PPF better than ELSS?
Choosing between PPF and ELSS depends on individual preferences and financial goals. PPF offers guaranteed returns and tax benefits, but with a longer lock-in period of 15 years. ELSS, on the other hand, potentially provides higher returns with a shorter lock-in period of three years. Investors seeking safety and stability might prefer PPF, while those comfortable with market fluctuations and aiming for potentially higher returns may opt for ELSS. It is essential to align the choice with personal risk tolerance and investment objectives for a well-suited decision.
How much of ELSS is tax-free?
ELSS funds provide taxable capital gains. With a three-year lock-in period, you'll only have long-term gains. Up to Rs 1 lakh a year in gains is tax-free. Any amount beyond this limit faces a 10% tax, and there's no indexation benefit, meaning no adjustment for inflation on the principal amount.
Is it good to invest lumpsum in ELSS?
Investing a lump sum amount in ELSS depends on individual preferences and risk appetite. While lump sum investments offer immediate exposure to the market, they can be more susceptible to market volatility. Considering ELSS has a three-year lock-in, investors should assess their risk tolerance and market conditions. SIPs are an alternative, providing a phased approach and potentially reducing the impact of market fluctuations. Both lump sum and SIP investments have their merits, and the choice should align with an investor's financial goals, risk tolerance, and market outlook.
How often should I monitor my ELSS investment?
It is advised to review your ELSS portfolio periodically but avoid excessive tinkering. Focus on long-term goals and rebalance your portfolio if necessary.
The information provided on this page is for educational purposes only and should not be considered as financial advice. Past performance is not indicative of future results. Always consult with a financial advisor before making any investment decisions. Mutual fund investments are subject to market risks; please read all scheme-related documents carefully.
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