DTC draft seemed to propose removal of Sec 80 C benefits for ELSS MF.
Since DTC will kick in from the next financial year, you can still buy them this year and get tax benefit under 80C this year.
However, if folks buy in Dividend re-investment option, not only will they be in a 3 year lock in (for every investment) but also not get any benefit [your new units are locked for a further 3 years].
With that in mind, change your dividend reinvestment option to a simple dividend or growth option.
My thoughts:
Most new investors used ELSS option to tap the market and get tax benefits.
Won't investors whose ELSS mature this year redeem and not invest next year?
Wouldn't this reduce the popularity of ELSS + reduce the assets?
Won't this have any effect on the performance of these funds?
For existing ELSS schemes, I would definitely want to try and change my option from Divident Re-investment to either Growth or Dividend payout.
Once 3 years lock-in period completes, exit.
Instead of investing in a new ELSS scheme this year, shouldn't we look at other options?
Await the DTC to become an act, see the impact and take a calculative decision?
These are my thoughts? I could be wrong....what do you think?
Since DTC will kick in from the next financial year, you can still buy them this year and get tax benefit under 80C this year.
However, if folks buy in Dividend re-investment option, not only will they be in a 3 year lock in (for every investment) but also not get any benefit [your new units are locked for a further 3 years].
With that in mind, change your dividend reinvestment option to a simple dividend or growth option.
My thoughts:
Most new investors used ELSS option to tap the market and get tax benefits.
Won't investors whose ELSS mature this year redeem and not invest next year?
Wouldn't this reduce the popularity of ELSS + reduce the assets?
Won't this have any effect on the performance of these funds?
For existing ELSS schemes, I would definitely want to try and change my option from Divident Re-investment to either Growth or Dividend payout.
Once 3 years lock-in period completes, exit.
Instead of investing in a new ELSS scheme this year, shouldn't we look at other options?
Await the DTC to become an act, see the impact and take a calculative decision?
These are my thoughts? I could be wrong....what do you think?
Good one .. I wonder abt the talk that these ELSS funds will be merged with their corresponding Equity/Equity Diversified funds. Say for example, if you take HDFC Tax saver, if and when DTC comes into effect, to protect the AUM and investors' interests, chances of it being merged with say HDFC Equity fund or Top 200 fund are more. May be I am wrong :)
ReplyDeleteBut if its a merger, isn't it sell and re-buy.
ReplyDeleteDoesn't it imply AUM benefiting due to entry load charges? (and exit load for folks whose 3 years are not over)?