The equity-linked tax planner will provide an income tax break of 20 per cent under section 88 on investments up to Rs 10,000 within the overall limit of Rs 60,000. For instance, if an investor has a tax liability of Rs 20,000 and invests Rs 10,000 in an ELSS, his tax-liability will come down by Rs 2000 to Rs 18,000. The fund industry has been demanding a hike in ceiling on investments under ELSS to Rs 20,000 or segregating the investment limit of Rs 10,000 from the overall ceiling of Rs 60,000.

Once the plan opens for fresh sale of units, the sale price will initially be based on the historic daily NAV and will later move to a prospective NAV. The minimum investment in UTI ETSP is Rs 500. Investments in ELSS carry a lock-in of three years, which means that investors can redeem their units after a period of three years.

After the government allowed mutual funds to launch open-end ELSS this year, four open-end ELSS have been launched, while three closed-end tax planners have gone open-end. Prudential, Birla, Kothari Pioneer and UTI have tapped investors with new schemes, while existing ELSS from Alliance, Canbank and Tata AMCs have gone open-end. AMCs like Esctors and Sundaram Newton are planning to enter the ELSS market.

``With schemes now open-end, funds can sell these products with considerable ease while saving on marketing and advertising expenses. Till last year, new ELSS were launched every year around the tax season with required aggressive marketing,'' said the marketing head of a mutual fund. ``Except for the tax concessions, an ELSS is a growth fund and some of the ELSS have given very high returns in the past few years. However, with their close-end nature in the past, investors could not enter these funds. Besides a choice of ELSS now, investors can take the systematic route to invest some money every month rather than investing the whole sum at the close of a financial year,'' added an analyst. Until last year, equity-linked tax planners were close-end funds with a tenure of ten years and provided repurchase facility after three years.

The top performer among the tax planners has been the scheme from Alliance Mutual Fund, Alliance Tax Relief '96 which has given a return in excess of 450 per cent in the last three years. The fund has a current net asset value of Rs 57.