After the government approval to launch the open-end ELSS early this year, AMCs have either launched open-end tax-savers or converted their existing tax-saving vehicles into open-end funds. Kothari Pioneer launched an open-end ELSS in April this year, while Tata Mutual Fund converted its lone ELSS of 1996 into an open-end fund.

In ELSS, an investor gets tax exemption under section 88 of the IT Act. For instance, if you have a tax liablity of Rs 5,000, an investment of Rs 10,000 in an ELSS (the maximum limit) will bring it down to Rs 3,000 (20 per cent of Rs 10,000). Tax saving mutual funds carry a lock-in of 3 years.

"The benefit now is that after three years,you can roll-on the investment for a subsequent three years with a mere book entry and you no longer have to wait for AMCs to launch ELSS before the end of a fiscal. Second, if you make an investment of Rs 10,000 each year for three years, you can roll over your investments and earn a tax-break of 20 per cent for N-number of years. Besides, you have the advantage of capital appreciation, which you can redeem after three years,'' said an analyst.

Besides the benefit of going open-end, the resurgence of the tax-saving category can be attributed to the high returns generated by some of the ELSS funds from Alliance, Jardine Flemming, Kothari and Tata AMCs. Collections under the closed-end ELSS had nosedived in the last few years following poor peformance with net asset values languishing below par. In some cases, the depreciation in NAV was higher than the saving of Rs 2000 an nvestor made by putting his money in ELSS. After seeing a whopping collection of over Rs 1400 crore in mid-90s, mobilisation by ELSSdropped to a meagre Rs 36 crore in fiscal 1998.

However, It remains to be seen whether the investor will be drawn towards the ELSS category. One definite advantage with the ELSS that have generated fantastic returns is their relatively small size which gives them a greater degree of manouevreability.

The ELSS plan from Prudential will offer the systematic investment plan and tax concession under sections 54EA and EB. The fund will charge an entry load of 1 per cent.