ELSS Calculator
The ELSS Calculator is a simple online tool designed to help you estimate the potential returns from Equity Linked Savings Schemes (ELSS) while calculating the approximate tax savings available under Section 80C. With just a few clicks, you can plan your investments more effectively and get insights into your potential returns and tax benefits!
Monthly SIP Amount
₹
SIP Period
years
Expected Return Rate (p.a)
%
Invested amount
₹ 30,00,000
Estimated returns
₹ 39,66,432
Total value
₹ 69,66,432
What is an ELSS?
An ELSS is a type of equity mutual fund designed to help you save on taxes while investing in the stock market. You can claim a tax deduction of up to ₹1.5 lakh per year under Section 80C of the Income Tax Act, which can help you save up to 30% of your taxable income, depending on your tax bracket. ELSS primarily invests in stocks across different sectors, providing a diversified portfolio. It has a 3-year lock-in period. It is a good option for those looking for tax savings while participating in equity investments.
What is an ELSS Calculator?
The ELSS calculator is a simple online tool that allows investors to estimate the value of their investments over time. Whether you invest in a lump sum or through a SIP (Systematic Investment Plan), the calculator helps you input key details such as the amount you plan to invest, the expected return rate, and the duration of your investment.
Once you’ve entered this information, the calculator will display an estimate of the total value of your investment at the end of the investment period. It also shows the potential tax savings available under Section 80C of the Income Tax Act, with deductions up to ₹1.5 lakh per year. This tool makes it easy to adjust different variables, such as investment amount or time frame, to see how they impact the maturity value of your ELSS investment.
Benefits of ELSS Calculator
The ELSS calculator offers several advantages that simplify investment planning and decision-making:
- It offers quick and accurate calculations based on your input.
- Compares the potential returns from SIP and lump sum investments.
- Gives approximate tax savings under Section 80C with ease.
- Saves you time by providing instant results, eliminating the need for manual calculations.
- Allows for easy adjustments of variables, helping you estimate different outcomes and investment strategies.
How does an ELSS Calculator work?
An ELSS calculator is made to estimate the potential returns on your ELSS investments. It calculates the maturity value based on the following key inputs:
- Investment type: Choose between SIP or lump sum.
- Investment amount: Specify the amount you plan to invest, either monthly or as a one-time sum.
- Duration: Indicate the number of years you intend to keep your money invested.
- Expected annual return: Input the estimated rate of return from your ELSS fund.
- Tax savings: ELSS investments are eligible for tax deductions of up to ₹1.5 lakh under Section 80C, helping you save on taxes while you invest.
Let us understand this with an example.
Suppose you plan to invest ₹1,00,000 lump sum in an ELSS Mutual Fund scheme with an annual expected return of 12% for 3 years.
The calculator will use the following formula to calculate the final value of your investment:
FV = P × (1 + r)^n
Where,
FV is the final value
P is the initial investment
r is the annual interest rate
n is the investment duration
By applying these values to the formula, we derive:
Future Value (FV) = ₹1,00,000 × (1 + 0.12)^3
Maturity Amount = ₹1,40,493
Thus, the maturity amount of your lump sum ELSS Investment of ₹1,00,000 at a 12% rate of return for 3 years would be approximately ₹1,40,493, with tax savings of ₹31,200.
Similarly when you would like to invest ₹5,000 in an ELSS Mutual Fund scheme by contributing monthly.
In this case,
M = P × ({[1 + r]^n – 1} / r) × (1 + r)
Substituting
P = 5,000
r = 12% or 0.12
n = 3 years,
We get
M = P × ({[1 + r]^n – 1} / r) × (1 + r)
M = 5,000 x ({[1+0.12]^3-1/0.12) x (1+0.12)
M = 2,17,538
So, if you invest ₹5,000 monthly through SIP for 3 years at 12%, the maturity value will be around ₹2,17,538, with tax savings of ₹56,160.
How to use Kotak Securities' ELSS Calculator?
To use the Kotak Securities' ELSS calculator, follow these steps to calculate the estimated returns for both SIP and lump sum investments:
Step 1: Select the Investment mode. - Choose SIP if you plan to invest a fixed amount every month. - Choose a lump sum for a one-time investment.
Step 2: Input the Investment amount. - For SIP, enter the monthly contribution. - For a lump sum, enter the total amount you are investing at once.
Step 3: Set the Investment duration: Provide the number of years you plan to stay invested in the ELSS fund.
Step 4: Enter the expected return rate.
Step 5: The calculator will provide an estimated maturity value and display potential tax savings under Section 80C, where ELSS investments are eligible for tax deductions of up to ₹1.5 lakh.
Once all details are entered, the calculator will provide an estimated maturity value and tax savings of your ELSS investment based on the formula used in the above section.
For example:
For a lump sum investment of ₹1,00,000 over 3 years at a 12% return, the maturity value will be ₹1,40,493, with tax savings of ₹31,200.
For a ₹5,000 monthly SIP over 3 years at the same return rate, the calculator will estimate a maturity value of ₹2,17,538, with tax savings of ₹56,160.
Frequently Asked Questions
What is an ELSS calculator?
An ELSS calculator is an online tool that helps you calculate the estimated returns from your Equity Linked Savings Scheme (ELSS) investments. You simply input details like investment amount, duration, and expected returns, and the calculator shows you the estimated projected value at the end of your investment period.
What are the benefits of investing in ELSS?
You can claim a tax deduction of up to ₹1.5 lakh under Section 80C.
ELSS has a 3-year lock-in, offering quicker liquidity than other tax-saving schemes.
You can invest in ELSS through a SIP, making it easy to invest regularly.
Who should invest in ELSS?
ELSS is a good fit for those who need to save on taxes under Section 80C and are comfortable with investing in equities. It is designed for investors who can commit to a 3-year lock-in with some level of risk.
How to invest in an ELSS?
Investing in an ELSS fund is simple. You can either:
- Invest a lump sum: One-time investment.
- Start a SIP: Invest a fixed amount regularly.
You can do this through mutual fund platforms, your bank, or online apps.
What is the lock-in period of ELSS?
The lock-in period for ELSS is 3 years, which means you cannot withdraw your investment during this period. After 3 years, you can redeem your units or continue to stay invested.
What are the tax implications of investing in an ELSS?
By investing in ELSS, you can claim a tax deduction of up to ₹1.5 lakh under Section 80C. After the lock-in period, any gains above ₹1 lakh are taxed at 12.5% as Long-Term Capital Gains (LTCG).
How are ELSS returns calculated?
ELSS returns are calculated based on the investment amount, duration, and expected annual rate of return. The returns are compounded over time, factoring in market performance and reinvested gains.
Is ELSS taxable after 3 years?
Yes, after 3 years, any gains over ₹1 lakh from your ELSS investment are subject to 12.5% Long-Term Capital Gains (LTCG) tax. Gains below ₹1 lakh remain tax-free.
Does ELSS give dividends?
Yes, some ELSS funds offer a dividend option, where you receive periodic payouts. These dividends, however, are taxable according to your income tax slab.
What is the maximum tax benefit that can be availed by investing in ELSS every year?
The maximum tax benefit you can claim by investing in ELSS is ₹1.5 lakh per year under Section 80C of the Income Tax Act.
Does every SIP investment in ELSS have a lock-in period?
Yes, each SIP instalment in an ELSS fund has a 3-year lock-in period. This means that each monthly investment will only be accessible after completing its individual 3-year period, allowing you to gradually build a tax-saving corpus over time..
