Does ELSS still beat a regular Nifty 500 index fund for a new-regime filer?
Scenario
30%-slab investor under NEW regime, comparing ₹1.5 lakh/year into ELSS vs Nifty 500 index fund over 10 years. New regime: no 80C deduction available.
Inputs
- Regime
- new
- Slab %
- 30
- Elss ter %
- 1
- Horizon years
- 10
- Index fund ter %
- 0.2
- Elss gross return %
- 12
- Annual contribution INR
- 1,50,000
- Index fund gross return %
- 12
Calculation
- 1.
ELSS net return after TER
12% − 1.0% → 11% CAGR
- 2.
ELSS 10-year corpus
₹1.5L × SIP-FV factor at 11%, 10 yrs → ₹27.00 L
- 3.
Index fund net return after TER
12% − 0.20% → 11.8% CAGR
- 4.
Index fund 10-year corpus
₹1.5L × SIP-FV factor at 11.80%, 10 yrs → ₹28.20 L
- 5.
Tax advantage of ELSS in new regime
none → ₹0
- 6.
Net advantage to index fund
₹28.2L − ₹27L → ₹1.20 L
Conclusion
Under new regime, the index fund wins by ₹1.2 lakh on ₹15 lakh of total nominal contributions over 10 years — purely from TER drag. No 80C deduction means no offsetting tax benefit. ELSS's 3-year lock-in becomes a pure friction cost without compensation.
Tradeoffs
Under OLD regime, the same comparison flips: ELSS's ₹45K/year tax saving over 10 years compounds to roughly ₹4.5L of extra after-tax wealth, dwarfing the ₹1.2L TER drag. ELSS is structurally an OLD-regime product. Choose vehicle based on your regime.