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Future of ELSS

Post DTC, tax planning funds will function like any other diversified equity fund post

I have an SIP of Rs 5,000 in Fidelity Tax Advantage which I started in June 2010. I now wish to invest an additional Rs 20,000 for tax saving. Which fund do you suggest? What will happen to ELSS once DTC comes into play from April 1, 2012? Should I continue my investments?
- Naveen Kumar

Fidelity Tax Advantage is a highly rated fund by us and has a good performance history. You can invest the additional Rs 20,000 that you plan to invest in the same fund or opt for Canara Robeco Equity Tax Saver or HDFC Taxsaver, which are both 5-star rated funds.

Tax benefits on ELSS will cease to exist once DTC is enforced. How AMCs will treat their existing tax planning funds remains to be seen. However, you will get Section 80C benefits in any ELSS investment that you make before April 2012.

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