How would the DTC impact ELSS funds? Is it advisable to invest in ELSS considering they have a lock-in of 3 years?
-Kapil Malhotra
ELSS funds will not be valid tax-saving instruments once the DTC comes into play. The 3-year lock-in will prevail for your investments, and in all probability, ELSS funds will be turned into vanilla equity funds. Once the DTC comes into effect, no new money can come into these funds and investors will be able to only get out of them. This might have a marginal negative impact, but we don’t think it will result into poor performance because the money in these funds has been built over a long period of time.
This article was originally published on June 25, 2012.