Direct Tax Code Impact on Equity Linked Savings Scheme

Though DTC proposals is marginally negative for the investors, tax benefit is one of the several benefits of investing into mutual funds, and reducing them or removing them should not have a major impact on investors buying behavior.

Equity Linked Savings Schemes (ELSS) has become a very popular product among the investors over the past few years due to its dual benefits such as exposing the investor’s money to equity and providing tax advantage. Some of the investors had made their entry into equity markets by investing through this category of mutual fund product. Investors made investments into ELSS through Systematic Investment Plan (SIP) or lumpsum mode. SIP way of investment has helped investors to benefit from correction in the market by buying more units when the markets declined and fewer units when the markets surged up. This helped them to average their cost per unit in a long run. Along with it, equity portion helped to generate long term capital appreciation. Investors who had opted for dividend option were able to reap gains during the surging market scenario, by receiving periodic income. ...(Read More)