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Tax Saving Funds and the Code

The proposed Tax Code may have signed their death warrant

What kind of an impact will the new Tax Code have on the ELSS? I have been a mutual fund advisor for the last six years, can you elaborate?

It is surprising that the equity-linked savings schemes (ELSS) find no mention in the new Tax Code. What is to be understood is whether that was by design or by omission. It is unlikely that it is by omission because there are four other things mentioned and of them two are clearly in a very deliberate way. So, it may just cease to exist in its current form because, if there is no 80(c) then there can't be an 80(c) fund.

The Code is not an amendment or revision, it’s a replacement for the old one. It substitutes the existing tax system of the land. Apparently, it looks as if ELSS will not exist in this form after the Code comes into play.

But since it’s a good instrument, very cost-effective, well regulated and transparent, hence it is good for investment. A very strong case can be built by the mutual fund industry for it to be brought a different form. Of course, by going through the new tax law the new tax saving funds will become very long-term funds. The redemption might get linked to the retirement of an individual or his retirement age.
There could be a new product that can be created, but for that the mutual fund industry will have to work harder and make its voice heard. 

As per Value Research advise, I had invested in Kotak 30 and would like to invest in one more fund. What is your opinion?

Kotak 30 is a good fund. It is always advisable to invest in funds which have a history and hence looking at them to choose the funds will ensure that the funds are good performers. You can consider one of the following funds for your investment: Franklin Prima Plus, DSPBR Top 100 and HDFC Top 200.

Invest in any one of them on a regular basis. Even when the market is falling keep up with your investment. 

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