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ELSS Calculator

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Applicable Tax post ELSS investment

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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.

ELSS Funds - Equity Linked Savings Scheme

As we grow in life, saving for tax or planning for income tax deduction becomes an unavoidable exercise.

Government of India allows you to save tax under Section 80C, 80D, 80EE . You can claim tax deduction up to ₹ 1.5 lakh under Sec 80C, additionally you can save ₹ 25,000 ( ₹ 50,000 for senior citizens) under Section 80D and ₹ 50,000 under Section 80EE . As beginners we are introduced to tax saving options such as PPFs, Insurance, ULIPs and more.

Other than traditional investment options, you can consider investing in equity as an asset class with ELSS (Equity Linked Savings Scheme), which is an equity mutual fund with a 3-year lock-in.

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.

What is ELSS Mutual Fund?

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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