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Impact of DTC

Tax saving funds lose favour once the DTC comes into effect

I have invested Rs 25,000 in HDFC Tax Saver scheme last month. I hadn’t read about DTC bill till then. Will I get any tax exemption from this? Where the money should be invested to get tax exemption?
- Jyotsana

The direct tax code (DTC) comes into effect from April 2012 only. Investments in tax saving funds for 2010-11 and 2011-12 will both qualify for deductions under Section 80C. Your investment of Rs 25,000 will definitely qualify for deductions. Tax saving funds is not present in the set of products that qualify for tax deductions in the DTC. In the DTC regime NPS (new pension scheme) and pure insurance plans are the only ones to qualify for tax deduction benefits.

This article was originally published on December 30, 2010.

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