ELSS Calculator

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.

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.

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.

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.

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.