The ELSS calculator is designed to help potential investors make the right decision concerning investments in ELSS funds. The calculator helps users find out whether an investment is effective or not in meeting their financial needs. It uses a range of tools that aid investors in making the right decision while selecting an ELSS scheme.
Equity Linked Savings Scheme (ELSS) funds are a type of mutual funds where majority of the corpus is invested in equities. Investments in ELSS funds can be made either via SIP (Systematic Investment Plan) or in a lump sum. They come with a lock-in period of 3 years and provides better liquidity and returns, when compared with investments in National Savings Scheme and Public Provident Fund. Most of the industry experts recommend ELSS as one of the best tax-saving instruments. Investments in ELSS qualify for tax deduction under Section 80C of the Income Tax Act, 1961. An individual can invest in an ELSS scheme and claim a tax deduction of up to Rs. 1.5 lakhs in a financial year.
The lump sum calculator helps investors find out how much a said amount of investment in an ELSS would you fetch at maturity. The calculator factors in the time period of investment and a specific rate of interest and tells the user the expected value of his or her investment. It, however, does not take into consideration the aspects of tax in the calculation. An essential point to be noted is that a mandatory lock in period of 3 years shall apply.
To understand how the calculator works, consider the following instances:
Mr. X wants to invest a lump sum amount of Rs. 60,000 for 4 years with an expected rate of return per annum at 15%. He enters these figures on the calculator. The investment amount that Mr. X stands to receive at maturity, based on the inputs he has provided, is Rs. 1,04,940.
Ms. Y wants to invest a lump sum amount of Rs. 80,000 for 5 years with an expected rate of return per annum at 18%. She enters these figures on the calculator. The investment amount that Ms. Y stands to receive at maturity, based on the inputs she has provided, is Rs. 1,83,021.
Note - The figures generated are as per the inputs provided alone and does not consider the market conditions.
Now, concerning investments, it is important to time the market and wait for the most opportune moment to invest, so as to earn maximum returns. While investing in an ELSS scheme, if the fund’s NAV has peaked, it is advisable to refrain from making a lump-sum investment. The most appropriate time would be when the market or the NAV is close to its year’s low and when there is a strong possibility that the fund is going to start appreciating soon.
All open-ended ELSS schemes give investors the option to make investments through SIPs. Systematic investing is a great means of avoiding any pitfalls of parking funds in equities. Small investments at regular intervals help in yielding good returns over longer period of time. Investment professionals usually suggest potential investors to go for monthly SIPs, as they help them participate in the stock market without the worries of timing it, in addition to bringing discipline to their investments.
Before investing in an ELSS scheme via the SIP route, it is essential to first understand how much the investment will be worth by the end of the tenure. The SIP calculator helps users understand how much returns the investment via SIP would yield. The details that the potential investor would have to provide include the amount of investment, frequency of SIP, expected rate of return p.a. and duration of SIP.
To understand how the calculator works, consider the following instances:
Mr. A wants to invest a monthly SIP amount of Rs. 1,000 for 3 years with an expected rate of return per annum at 13%. He enters these figures on the calculator. The investment amount that Mr. A stands to receive at maturity, based on the inputs he has provided, is Rs. 43,743.
Ms. B wants to invest a quarterly SIP amount of Rs. 4,000 for 4 years with expected rate of return per annum at 15%. She enters the figures on the calculator. The investment amount that Ms. B stands to receive at maturity, based on the inputs she has provided, is Rs. 88,780.
Note - The figures generated are as per the inputs provided alone and does not consider the market conditions.
One of the plus points of the SIP route is that it aids individuals to invest across market cycle, which helps one benefit from rupee cost averaging. Also, it is essential to note that early investors can benefit from the power of compounding. Investing in an ELSS scheme via SIP at the beginning of the year is one of the most effective ways to harness the power of compounding to the fullest.
This is a specialized SIP calculator that provides an insight into the historical performance of a SIP. It is designed to give users an estimate of how much the SIP investment will be worth at maturity. The calculator factors in details such as:
This form of evaluation is a good measure to assess how a fund performs at different market cycles. The long-run performance provides a good insight into understanding where the fund might be headed in terms of future prospects. It must however, be noted that past performances are not a guarantee to the returns in the future.
Individuals can select the leading tax-saver mutual fund from the many ELSS funds available in the market through the use of the ELSS Calculator. The ELSS Calculator for SIP Past Performance can be used to assess the fund’s effectiveness at varying market conditions.
To know why this is essential, think about this – only some ELSS funds perform extremely well during market booms. Tax-saver mutual funds usually comprise of those that are largely invested in small-cap and mid-cap firms, which have the potential for high growth during rising markets. However, these funds can lose all of these gains and may even result in losses during market busts. Thus, it becomes necessary to look into the past performance of the fund during both the boom and bust periods through the use of the ELSS Calculator.
The following table lists down the performance of some of the top ELSS mutual funds in the market:
| ELSS Name | 1-Year Return (%) | 3-Year Return (%) | 5-Year Return (%) |
|---|---|---|---|
| L & T Tax Adv Direct-G | 12.8 | 14.5 | 23.1 |
| Tata India Tax Savings Direct-G | 13.1 | 14.9 | - |
| IDFC Tax Advantage (ELSS) Direct-G | 14.3 | 13.9 | 25.5 |
| Aditya Birla SL Tax Relief 96 Direct-G | 19.5 | 15.2 | 27.1 |
| DSP BlackRock Tax Saver Fund - Direct Plan (G) | 11.3 | 14.2 | 25.0 |
| Motilal Oswal Long Term Equity Direct-G | 9.9 | 18.2 | - |
| HDFC LT Advantage Direct-G | 14.0 | 14.9 | 22.9 |
| Aditya Birla SL Tax Plan Direct-G | 19.4 | 14.9 | 26.5 |
| BOI AXA Tax Advantage Direct-G | 21.0 | 14.7 | 23.9 |
| Invesco India Tax Plan Direct-G | 24.0 | 15.6 | 27.1 |
Is ELSS taxable after 3 years?
ELSS, which has a mandatory 3-year lock-in period, used to offer tax-free returns earlier. However, with the recent re-introduction of LTCG tax in the budget, the returns now stand to be taxed. Long-term capital gains from equity mutual funds over Rs. 1 lakh would be taxed at 10% without any indexation benefit.
Is demat account required for ELSS?
No, it is not necessary to have a demat account to invest in an ELSS mutual fund. You can opt for it through an AMFI-certified mutual fund advisor or directly from a fund house's website.
Is it safe to invest in ELSS?
Investments in ELSS come under the High Risk and High Reward category. Such investments are subject to market risks and do not guarantee returns.
How do I invest in ELSS funds?
Individuals can opt for ELSS funds either directly from the website of the fund house or through an independent online mutual fund distributor. Those who do not wish to do it through the online mode can visit any of the branches of the fund house to invest in an ELSS fund.
Which one is better ELSS or sip?
Equity Linked Savings Scheme (ELSS) funds are a type of mutual funds where majority of the corpus is invested in equities. Investments in the ELSS funds can be made either via SIP (Systematic Investment Plan) or in a lump sum. ELSS is a type of wealth-creation fund, while SIP is a mode of investing in ELSS.
Is maturity of ELSS taxable or not?
Yes, it is long-term capital gains tax applies on equity mutual funds, including ELSS funds. Long-term capital gains from equity mutual funds over Rs. 1 lakh would be taxed at 10% without any indexation benefit.
Is income from ELSS taxable?
Yes. Long-term capital gains tax applies on equity mutual funds, including ELSS funds. Long-term capital gains from equity mutual funds that is greater than Rs. 1 lakh would be taxed at 10% without any indexation benefit.
