ELSS Calculator
Calculate returns from Equity Linked Savings Scheme with Section 80C tax benefits
Tax Benefit
Up to ₹1.5L (80C)
Lock-in Period
3 Years
Expected Returns
10-15% p.a.
Minimum: ₹500 | Maximum: ₹12,500 (for 80C benefit)
Minimum lock-in: 3 years | Recommended: 5+ years
Historical ELSS returns: 10-15% p.a.
New tax regime rates: 5%, 20%, 30%
ELSS (Equity Linked Savings Scheme) is a type of mutual fund that primarily invests in equity and equity-related instruments. ELSS funds come with a mandatory lock-in period of 3 years and offer tax benefits under Section 80C of the Income Tax Act, making them one of the most popular tax-saving investment options in India.
Unlike traditional tax-saving instruments like PPF or NSC, ELSS offers the potential for higher returns through equity exposure while providing tax deduction benefits. With the shortest lock-in period among all Section 80C options, ELSS funds provide the perfect balance between tax savings and wealth creation.
Tax Benefits
- • Section 80C deduction: Up to ₹1.5 lakh per year
- • Tax saving: Save up to ₹46,800 annually (30% bracket)
- • LTCG tax: Nil up to ₹1 lakh, 10% above ₹1 lakh
- • No TDS: No tax deducted at source on gains
Investment Flexibility
- • Shortest lock-in: Only 3 years among 80C options
- • SIP option: Invest monthly from ₹500
- • Lump sum: Minimum ₹500 investment
- • No upper limit: Invest beyond ₹1.5L for wealth creation
Return Potential
- • Historical returns: 10-15% CAGR over long term
- • Equity exposure: 80% minimum in equity instruments
- • Professional management: Expert fund managers
- • Diversification: Spread across sectors and companies
Cost Efficiency
- • Lower expense ratio: Typically 1-2.5% annually
- • No entry load: Zero charges on investment
- • Exit load: Usually 1% if redeemed before 1 year
- • Direct plans: Lower costs with direct investment
| Parameter | ELSS | PPF | NSC | ULIP |
|---|---|---|---|---|
| Lock-in Period | 3 years | 15 years | 5 years | 5 years |
| Expected Returns | 10-15% p.a. | 7-8% p.a. | 6-7% p.a. | 8-12% p.a. |
| Risk Level | High | Low | Low | Medium-High |
| Liquidity (post lock-in) | High | Partial | High | Medium |
| Tax on Maturity | LTCG (10%) | Tax-free | Taxable | Tax-free |
| Minimum Investment | ₹500 | ₹500 | ₹1,000 | ₹1,500 |
| Investment Flexibility | High | Medium | Low | Medium |
Why Choose ELSS?
- • Shortest lock-in period allows for better liquidity planning
- • Highest return potential among Section 80C options
- • Professional fund management with diversified portfolio
- • Inflation-beating returns over the long term
- • Flexibility to invest beyond ₹1.5L limit for wealth creation
SIP Strategy
- • Regular investing: ₹12,500 monthly for full 80C benefit
- • Rupee cost averaging: Reduces impact of market volatility
- • Discipline: Automated investing builds wealth systematically
- • Flexibility: Start small and increase over time
Timing Strategy
- • Early investment: Start investing in April for maximum benefit
- • Market corrections: Invest during market downturns
- • Year-end rush: Avoid December investments due to high NAV
- • 3-year cycle: Plan redemptions post lock-in strategically
Fund Selection
- • Track record: Choose funds with 5+ years performance
- • Expense ratio: Prefer lower cost funds (below 2%)
- • Fund manager: Check manager's experience and tenure
- • AUM size: Avoid very small or very large funds
Risk Management
- • Diversification: Don't put all 80C money in ELSS
- • Asset allocation: Balance with debt instruments
- • Review regularly: Monitor fund performance annually
- • Exit strategy: Plan systematic withdrawal post lock-in
Investment Stage
Holding Period
Redemption Stage
Tax Planning Tips
- • Plan redemptions to stay within ₹1L annual LTCG exemption
- • Consider redeeming older units first (FIFO method)
- • Spread large redemptions across financial years
- • Reinvest gains in fresh ELSS for continued tax benefits
- • Keep detailed records of purchase dates and amounts
Can I invest more than ₹1.5 lakh in ELSS?
Yes, you can invest any amount in ELSS. However, tax deduction under Section 80C is limited to ₹1.5 lakh per financial year. Additional investments will be treated as regular equity mutual fund investments.
What happens if I redeem ELSS before 3 years?
ELSS has a mandatory lock-in period of 3 years. You cannot redeem your investment before completing 3 years from the date of investment. Early redemption is not allowed under any circumstances.
Are ELSS dividends taxable?
Yes, dividends from ELSS are taxable in the hands of investors as per their income tax slab. Dividend Distribution Tax (DDT) was abolished from April 2020, making dividends taxable for investors.
Can I switch between ELSS funds?
Switching between ELSS funds is treated as redemption and fresh purchase. Since ELSS has a 3-year lock-in, you cannot switch to another ELSS fund before completing the lock-in period.
How are ELSS returns calculated for tax purposes?
For tax calculation, gains are computed as Sale Price minus Purchase Price. ELSS doesn't provide indexation benefits. If total LTCG exceeds ₹1 lakh in a financial year, 10% tax applies on the excess amount.
Can I claim 80C deduction for ELSS invested through SIP?
Yes, each SIP installment is eligible for 80C deduction in the financial year it's invested. The 3-year lock-in applies separately to each SIP installment from its respective investment date.
What is the difference between ELSS and regular equity funds?
ELSS funds offer tax deduction under Section 80C and have a mandatory 3-year lock-in period. Regular equity funds don't offer tax benefits but provide complete liquidity (subject to exit load, if any).
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