Tax-deferred investments such as equity linked savings plan (ELSS) offer market linked returns and tax exemption are some tax-deferred investment options in India. Investors can calculate ELSS calculator to find their ELSS return using amount, time horizon, and return rate.
What is an ELSS Calculator?
An ELSS calculator online: It can calculate the maturity value and potential returns from ELSS investments. Specifying parameters such as investment amount, annual yield and time horizon are key data the calculator will input that can be used by the investor to budget his money.
How to Use an ELSS Calculator?
- Visit an online ELSS calculator tool on a reliable platform.
- Enter the monthly or lump-sum investment amount.
- Specify the expected annual return (typically ranges between 12% to 15%).
- Input the investment duration (minimum 3 years).
- Click on "Calculate" to view the maturity value and estimated returns.
Advantages of Using an ELSS Calculator
- Efficiency: Quickly estimates potential returns with minimal input.
- Clarity: Helps in understanding the impact of market performance on investments.
- Goal Planning: Facilitates financial goal-setting by providing clear projections.
- Free to Use: Available on various financial platforms at no cost.
How Does an ELSS Work?
ELSS is a kind of mutual fund, it’s mostly equity. It has 3 years mandatory lock-in and also includes tax exemption under Section 80C of the Income Tax Act. Returns are market correlated and subject to market performance. The longer the time-horizon, the more return that you can get.
ELSS Investment Returns Example
| Investment Type | Amount Invested (INR) | Tenure (Years) | Expected Annual Return (%) | Maturity Amount (INR) |
|---|---|---|---|---|
| Lump Sum | 1,00,000 | 3 | 12 | 1,40,492 |
| SIP | 5,000/month | 5 | 14 | 4,47,093 |
| Lump Sum | 2,00,000 | 7 | 15 | 5,34,569 |
Comparison of ELSS with Other Tax-Saving Investments
| Investment Option | Lock-in Period | Expected Returns | Risk Level | Tax Benefit |
|---|---|---|---|---|
| ELSS | 3 years | 12-15% | High | Up to INR 1.5 lakh under Section 80C |
| PPF | 15 years | 7.1% | Low | Up to INR 1.5 lakh under Section 80C |
| NSC | 5 years | 7.7% | Low | Up to INR 1.5 lakh under Section 80C |
| Tax-Saving FD | 5 years | 6.5-7.5% | Low | Up to INR 1.5 lakh under Section 80C |
Benefits of ELSS Over Other Investments
| Feature | ELSS | Other Options |
|---|---|---|
| Shortest Lock-in Period | 3 years | 5-15 years |
| Potential for High Returns | Yes (12-15%) | No (7-8%) |
| Market-Linked Growth | Yes | No |
| Tax Benefit | Up to INR 1.5 lakh under Section 80C | Up to INR 1.5 lakh under Section 80C |
Key Policies and Regulations Regarding ELSS
- Benefits Under Section 80C of Income Tax Act: You can deduct upto INR 1.5 Lakh for investments.
- Lock-in Period: Minimum lock-in of ELSS is 3 years, which is the shortest among tax savings funds.
- Eligibility: Any resident person can invest in ELSS. NRIs can even get invested with certain mutual funds.
- Returns: Returns are market dependent and can fluctuate according to the equity market performance.
- Investment Approach: SIP/Lot Commitment Methods ELSS is investable in the form of lump sum or SIPs.