A Study of investors’ Perceptions and Preferences towards Equity Linked Savings Scheme mutual funds as compared to other Tax Saving Investments- A Survey

Abstract

The Indian mutual fund industry has developed tremendously in the last few decades, after it has been open up for private players in 1993. Earlier UTI (Unit trust of India) was the sole player in mutual fund, however after the opening up of this sector to the private players intense competition has been seen in this financial sector, especially in last two decades.  Equity link saving scheme, more popularly known as ELSS was introduced in the year 1992 as a tax saver scheme U/S 88 where investor was provided tax rebate. However, in the financial year 2005-06 onwards tax rebate provided was changed to that of tax deduction U/S 80C of the income tax Act 1961 for investments made in the said fund. Since this fund has been there for around more than two decades, it is imperative to know the perceptions and preferences of investors towards ELSS and other tax saving avenues which has also been increased over a period of time in India. The present study has made an attempt to find out how the investors perceive and prefer ELSS mutual funds as compared to other Tax saving investment avenues available in the market. The present study, based on a survey of 100 respondents in Goa, is a modest attempt to find out the perception and preferences of investors toward ELSS as compared to other tax savings instruments available in India. As far as the perceptions and preferences of the investors is concerned it was found that there is a significant difference between investors perception towards Growth option investment plan of ELSS and investments in PPF, LIC, 5years fixed deposit bank schemes and NPS.