How the ELSS Calculator works
An ELSS (Equity-Linked Savings Scheme) fund is an equity mutual fund sold in India that carries a tax benefit under Section 80C of the Income Tax Act, in exchange for a 3-year lock-in on every unit purchased. This calculator does two things at once: it projects what a monthly SIP into an ELSS fund could grow to by a chosen return assumption, and it estimates the income tax you save by claiming the Section 80C deduction on that investment.
The maturity value formula
For a monthly investment P, a monthly rate of return i (the annual return divided by 12), and n total months, the calculator compounds each installment forward month by month — the standard future-value-of-a-series-of-payments approach used for SIP projections:
corpus after each month = (corpus so far + P) × (1 + i)
Repeating that step for all n = years × 12 months gives the projected maturity value. Total investment is simply P × n, and wealth gained is the maturity value minus total investment. This assumes a constant monthly rate of return, which real equity markets never deliver exactly — actual ELSS returns vary month to month.
The Section 80C tax saving
Section 80C allows a deduction of up to ₹1,50,000 per financial year from taxable income, shared across ELSS, PPF, life insurance premiums, and other eligible instruments — it is only available if you file under the old tax regime. The calculator takes the lesser of your annual investment (monthly amount × 12) and ₹1,50,000, multiplies it by your selected tax slab rate, and multiplies that by the number of years to estimate the total tax saved:
tax saved per year = min(annual investment, ₹1,50,000) × tax slab rate
This figure excludes the health and education cess added on top of income tax, and assumes you have enough taxable income each year to use the full deduction.
Worked example
Investing ₹12,500 per month (₹1,50,000 a year — the full 80C limit) for 5 years at an assumed 12% annual return grows to roughly ₹10.3 lakh, made up of ₹7.5 lakh invested and about ₹2.8 lakh of estimated growth. At a 30% tax slab, claiming the full ₹1,50,000 deduction each year saves an estimated ₹45,000 in tax annually, or about ₹2.25 lakh over the 5 years.
What the calculator does not include
- Market risk: ELSS funds invest in equities, so returns are not guaranteed and can be negative in a bad year — the return you enter is an assumption, not a forecast.
- Long-term capital gains tax: gains above ₹1,00,000 in a financial year on equity fund redemptions are typically taxed at a long-term capital gains rate when units are sold after the lock-in; this calculator does not deduct that tax from the maturity value.
- Fund expense ratio: the assumed return should ideally already be net of fund charges, since the calculator does not subtract them separately.
- Health and education cess: the tax-saved figure is based on the slab rate alone and excludes cess.