ELSS corpus + 80C tax saved.
Maturity corpus
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Invested
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Annual 80C tax saved
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ELSS in one line, and why it sits at the top of most 80C plans
An Equity Linked Savings Scheme is a diversified equity mutual fund that comes with a tax sweetener. Money you put in qualifies for deduction under Section 80C, within the overall ceiling of Rs 1.5 lakh a year, and each instalment is locked for three years. That lock-in is the shortest of any 80C product. A tax-saver fixed deposit ties your money for five years, the PPF for fifteen, and the NSC for five. For an investor who wants growth rather than a guaranteed but modest return, ELSS is usually the first 80C box I tick.
One thing trips up almost everyone: the 80C benefit lives only in the old tax regime. From AY 2024-25 onwards the new regime is the default, and it carries no 80C. So before you treat the tax saving as real, confirm you are actually filing under the old regime. If you are on the new regime, the ELSS is still a fine equity fund, but the deduction shown here is zero for you.
How this calculator builds the corpus
The maturity figure uses the future value of a monthly SIP, treating each instalment as invested at the start of the month (an annuity due). The formula is P times ((1 plus i) to the power n minus 1) divided by i, the whole thing multiplied by (1 plus i), where P is the monthly amount, i is the monthly return, and n is the number of months. The tax saved is calculated separately and simply: it takes the lower of your annual investment and the Rs 1.5 lakh cap, then multiplies by your slab rate. Note there is no cess added to the saving, because 80C reduces taxable income, it is not a direct credit.
A worked example: Rs 12,500 a month for ten years
Suppose you invest Rs 12,500 every month, which is Rs 1.5 lakh a year, the exact 80C ceiling. Assume a 12 percent annual return over 10 years and a 30 percent slab. Here is how the two outputs come together.
| Step | Value |
|---|---|
| Total invested (Rs 12,500 x 120 months) | Rs 15,00,000 |
| Maturity corpus at 12 percent | Rs 29,04,238 |
| Wealth gained | Rs 14,04,238 |
| 80C deduction claimed each year | Rs 1,50,000 |
| Annual tax saved at 30 percent slab | Rs 45,000 |
Notice the tax saved is Rs 45,000, not Rs 54,000. Even though you invested Rs 1.5 lakh, the deduction is capped at Rs 1.5 lakh, so 30 percent of that is the limit. Across ten years the deductions reduce your tax outgo by roughly Rs 4.5 lakh, while the fund itself nearly doubles your capital. The two benefits stack.
The lock-in is per instalment, not per folio
This is the detail people get wrong with an ELSS SIP. The three-year clock starts afresh on every monthly purchase. So an instalment bought in April 2026 becomes free to redeem in April 2029, but the instalment bought in May 2026 is locked until May 2029. You cannot pull out the whole accumulated value the moment the first SIP completes three years. If you start a SIP and run it for ten years, your last instalment is still locked for three years after the SIP ends.
Tax when you finally sell
The lock-in saves tax going in, but the exit is taxed like any equity fund. Long-term capital gains on equity, meaning units held over a year, are exempt up to Rs 1.25 lakh in a financial year and taxed at 12.5 percent above that, after the Budget 2024 change that raised the rate from 10 percent and lifted the exemption from Rs 1 lakh. Because every ELSS unit is held at least three years thanks to the lock-in, your gains are always long-term, which is a quiet advantage. A practical tip: redeem in tranches across financial years to use the Rs 1.25 lakh exemption more than once.
Common mistakes I see
People assume ELSS dividends are tax-free; they are not, dividends are added to income and taxed at slab, so always pick the growth option. People also load up a single ELSS at year-end in a panic instead of spreading a SIP across the year, which means they buy at one price point and lose the rupee-cost-averaging benefit. And a few try to redeem before three years through a broker glitch; it simply will not process, the units are frozen.
Can I stop an ELSS SIP whenever I want?
Yes. You can pause or stop fresh instalments any time, there is no penalty for stopping. What you cannot do is redeem units that have not yet completed their individual three-year lock-in. Stopping the SIP and redeeming old units are two different things.
Is there a maximum I can invest in ELSS?
There is no cap on how much you can invest in an ELSS fund. The Rs 1.5 lakh cap is only on the 80C deduction. You can put Rs 5 lakh into an ELSS if you like, but only Rs 1.5 lakh of it earns the tax break, the rest is treated as an ordinary equity investment.