Investments up to Rs.1 lakh per annum in an ELSS fund such as
Sundaram Tax Saver are fully tax deductible under Section 80-C of
the Income Tax Act, subject to conditions specified, if any. So you
can understand people investing up to a lakh in this fund. But how
do you explain many-an-investor investing several lakh in the fund?
Smart investors know that every investment in this fund is locked in
for a period of three years. So the fund manager has a long-term
perspective, doesn't have to worry about every twist and turn in the
Sensex, doesn't have to keep a lot of cash to allow for withdrawals
and stays well invested for long periods in the stocks meeting the
objectives of the scheme. This allows for better fund performance.
So even without the tax advantage, the 2nd, 3rd or 10th lakh of
investment earns them good returns. That's the 'Doosra' advantage
of Sundaram Tax Saver. (Past performance may or may not be
sustained in future).