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STPs are Treated as Fresh Investments

Switching from an open-end fund to an ELSS fund using an STP will get you the tax benefit

27-Oct-2014•Value Research

If I switch to an ELSS fund from a diversified equity fund using an STP, do I get the tax benefit? I have this doubt because technically it is not a new investment, and therefore it may not be considered for tax benefit.
- Amit Kher

Have no fear, you will definitely get the tax benefit. From a legal (and therefore taxation) perspective, an STP is a redemption from one fund, and a fresh investment in another fund. Therefore, both the tax benefit as well as the three-year lock-in will be there.

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