The Hindu : Business / Briefly : ELSS of MFs issued after April eligible for tax relief

Online edition of India's National Newspaper
Wednesday, Dec 14, 2005

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Business - Briefly

ELSS of MFs issued after April eligible for tax relief

NEW DELHI: In a major relief to the mutual fund industry, the Central Government on Tuesday amended the income-tax rules to declare investments in equity linked savings schemes (ELSS) issued on or after April 2005 eligible for tax exemption under Sec. 80C of Income-tax Act.

Investments in ELSS, issued as per the rules laid down in 1992 and 1998, were eligible for the tax rebate under Sec. 88 of the Income-tax Act if such investments were made on or before April 2005.

However, Sec. 88 has been replaced by Sec. 80C in the last budget.

Rules amended

Accordingly, the ELSS rules were notified in November and subsequently amended on December 13.

"In view of this, it is clarified that the tax benefit under Sec. 80C of the Income-tax Act will be available to investments made on or after April 1, 2005 in the units of a mutual fund or the Unit Trust if such units are issued under any plan formulated in accordance with the three schemes — ELSS-1992, ELSS-1992 as modified in 1998 and ELSS-2005,'' the Finance Ministry said in a release.

The ELSS rules were notified in November to clear the air on tax exemption.

No longer open-ended

But it also mentioned specifically that the ELSS schemes no longer be open ended.

It will be a plan with a fixed tenure of ten years.

This raised questions about the status of investments made by individuals in ELSS schemes that existed before the notification was issued. — PTI

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