ELSS Funds - ELSS Mutual Funds Investment in India

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ELSS Calculator

Age

What is your current Taxable Income ?

How much can you invest in ELSS to save tax?

Tax to be paid if you
DO NOT invest in ELSS

₹ 13,78,000

Tax to be paid in
ELSS

₹ 13,31,200

You Save

₹ 46,800

Know more about our ELSS offering

Disclaimers

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.

Income tax benefits 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 upto Rs 1.5 lakh.

What is ELSS Mutual Fund

ELSS is a type of Mutual Fund which allows you to claim for income tax deduction. You can save up to ₹ 1.5 lakhs a year in taxes by investing in ELSS, which is covered under Section 80C of the Income Tax Act, 1961. However, you can choose to invest more than ₹ 1.5 lakhs, but the excess will not qualify you to avail the tax benefits as per the provisions of Section 80C.

Traditional tax-saving instruments typically offer fixed returns and does not consider the high inflation prevalent in an economy like ours. For example, assuming 6% rate of inflation, investments which have fixed returns promise a return of 8%, in this case your real return would be merely 2%.

On the other hand, ELSS mutual funds invest in equities and hence, has the ability to generate higher inflation-adjusted returns over a longer timeframe. If you stay invested in ELSS for Long-term, it helps set off the short-term volatility associated with equities. Since these funds are managed by professionals, you need not worry about timing the market.

Benefits of ELSS

Shortest
ELSS has lock- in period of 3 years which is the shortest when compared with other tax saving instruments under Section 80C. Tax-saving FDs have a 5 year lock-in & PPF has a 15 year maturity. Hence, ELSS allows you greater flexibility in the medium term.
Potentially higher returns
Since ELSS mutual funds invests in equity markets, returns generated through them are significantly higher than other tax saving instruments.
Better post-tax returns
Long term capital gains of up to Rs. 1 lakh a year from ELSS mutual funds are exempt from income tax and long-term capital gains above Rs. 1 lakh are taxed at 10%.
Allows you to create wealth
Corpus generated out of ELSS investment can also be used to fulfil your financial goals. You can sync your ELSS investments to attain goals across life stages such as building a retirement kitty, saving for their child’s education, buying a car or making a down payment for their house.

Benefits Of ELSS vis-A-vis The Regular Tax Saving Options.

Instrument	Safety/Risk	Lock-In(Years)	Returns	Tax Free Gains
SCSS (Senior Citizens Saving Scheme)	Low Risk	5	7.4%^	No
NSC (National Savings Certificate)	Highest Safety	5	6.8%^	No
PPF(Public Provident Fund)	Highest Safety	15	7.1%^	Yes
Bank FD	Low Risk	5	6.20*	No
ELSS (Equity linked savings scheme)	High Risk	3	Market Linked	No
Life Insurance Premiums	Moderate Risk	Minimum 5	Variable	Yes
NPS (National Pension System)	Moderate Risk	Till age 60	Variable	Partially
EPF (Employee Provident Fund)	Low Risk	Till age 60	8.50%	Yes
Sukanya Samriddhi Yojana	Low Risk	15	7.6%^	Yes

^ Rates Applicable For Jan-Mar 2021; * For Non Senior Citizens Get 5.40% From SBI

Source : Finance Ministry For Government-Linked Investment Returns

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