Tax-saving equity schemes fail to take off
(updated - 04 Jan 2012)
Welcome to Indian Share Market
Your Desire to Earn
Uncertainty over Direct Taxes Code and poor equity markets play spoilsport in Mutual funds. A worsening equity market scenario and confusion over the Direct Taxes Code (DTC) have impacted inflows in equity-linked-saving-schemes (ELSS) in the current financial year.
Fund managers say declining sales and net inflows in the ELSS category, which is in line with what's happening with the pure equity funds, may deepen in the last quarter of FY12. They have kept their fingers crossed to see how the fourth and final quarter pans out.
Normally, the second half of every financial year witnesses rise of inflows in equity tax saving schemes. “However, this year, investors have confusion over DTC, which will take away the tax exemption once it is implemented,” says the chief marketing officer (CMO) of a bank-sponsored asset management company.
Till November, not a single month could see sales of more than Rs 200 crore and net inflows failed to cross a mere Rs 50 crore mark. “We had anticipated that post-October flows would rise. But, November disappointed with net outflows and in December there was no visible rise in interest for ELSS,” the CMO explains.
Most of the tax saving equity schemes are in the red, with a negative return of as high as 17 per cent over the last one year. Only four schemes from fund houses, including Axis, ICICI Prudential, Canara Robeco and Franklin have been able to give returns between two and five per cent during the year.
The overall sentiments, adds chief executive officer of a medium-sized fund house, in the equities are worsening. “ELSS, too, could not keep themselves aloof. Forget taxes, investors sensed that in such markets they cannot even make any reasonable returns,” he says.
However, investors can still buy ELSS this year as DTC will only be enforced from April. One would get the Section 80C benefits in any ELSS investment made till March 2012. Post that, there is no clear strategy about how fund managers would deal with their existing tax planning funds.
ELSS are mutual fund schemes covered under Section 80C, which means the money investor puts into these funds is reduced from the taxable income (up to a limit of Rs 1 lakh). Therefore, it helps reduce taxes. However, once DTC (Direct tax code) comes in, tax benefits on ELSS will cease to exist.
Disclaimer: Information presented on this site is a guide only. It may not necessarily be correct and is not intended to be taken as financial advice nor has it been prepared with regard to the individual investment needs and objectives or financial situation of any particular person. Stock quotes are believed to be accurate and correctly dated, but www.daytradingshares.com does not warrant or guarantee their accuracy or date.
www.daytradingshares.com takes no responsibility for any investment decisions based on recommendations provided on website.
Financial contents like Technical charts, historical charts and quotes are taken from NSE and Yahoo sites.
Note - All quotes are delayed by 15 minutes and unless specified.
Google Adsense Ads are posted on every page of the website so visitors clicking on Ads and going to those links and carrying any financial deal is not at all related to www.daytradingshares.com and any financial deal should be done on their own sole responsibility.
Please read at www.daytradingshares.com/disclaimer.php before using any material or advice given at www.daytradingshares.com
Copyright © 2005-2012 DayTradingShares.com. All Rights Reserved
