I wish to invest regularly in tax saving mutual funds. I heard that from the next financial year, there will be no tax rebate on these investments. Is it true? What happens to my current investments in these funds?
You are right in saying that the equity linked savings schemes (ELSS) as a category will have no function to serve (in terms of tax saving) once the Direct Tax Code (DTC) comes into effect.
The DTC, which will replace the archaic Income Tax Act, 1961, was proposed to come into effect from April 1, 2011, but had to be pushed back by a year to allow a smooth switchover and understanding of the new regime. It will now come into effect from the Indian financial year 2012-13, i.e. from April 1, 2012.
Till then, you can invest in tax-saving funds and avail of the benefit under Section 80C of the Income Tax Act.