The units of the Tata tax planner will be available at NAV-based price. The scheme has a current net asset value of Rs 13.87. Equity-linked saving schemes offer section 88 benefit where investments upto Rs 10,000 are entitled for tax rebate of 20 per cent. For instance, if an investor has a tax liability of Rs 3,000 and he invests Rs 5,000 in an ELSS, 20 per cent of Rs 5,000 (Rs 1,000) will be reduced from his total tax liability. This will bring down his tax payout to Rs2,000.

Tata AMC had approached Sebi immediately after the government had issued a notification to make ELSS open-end. ``We had absolutely no confusion on whether existing tax savers can be made open-end. Hence, we immediately decide to approach the market regulator to convert Tata Tax Saver to an open-end fund,'' K N Atmaramani, managing director, Tata AMC had told The Financial Express.

With its NAV at Rs 13.87, Tata tax saver has given an appreciation of 38.7 per cent in less than three years since launch. The AMC expects to attract fresh moolah on the basis of the fund's performance. During the initial offer period, the fund had mobilised Rs 13 crore and has a current corpus of Rs 18 crore.

Besides tax breaks under section 88, the fund will offer tax concessions under sections 54 EA and EB. While an investor has to hold investments for three years under section 88 and 54EA, investments cannot be redeemed for a period of seven years under section 54EB.

With the scheme completing three years ofoperation on April 1, 1999, it will also offer repurchase of units. Assuming the NAV is Rs 13.87 on April 1, an investor would get Rs 13,870 on an investment of Rs 10,000. Thus, an investor gets a capital appreciation of Rs 3,870 coupled with an initial tax saving of Rs 2,000. His total gains stand at Rs 3870 on an effective investment of Rs 8,000 or 48.37 per cent in three years (pre-tax). The maturity amount will attract long-term capital gains tax at 20 per cent. However, after providing for indexation benefit, the effective tax outgo will be lower.

As on December 31, 1998, the scheme is invested in 10 stocks with NIIT as its top holding. Other stocks include Dr Reddy's, Raymond, Ponds, Philips, BFL Software, Satyam Computer, Wyeth Lederle, Hoechst Marrion and Tata Infotech.

While Tata AMC has made its tax saver open-end, Birla AMC is in the process of launching a new open-end ELSS. The latter had launched its first ELSS last year which has a current NAV of Rs 15.25. ``One reason why some AMCs are notmaking their existing ELSS open-end is their high NAV. For instance, First India has an NAV of Rs 23 while that of Alliance tax saver is Rs 26. Investors may not be comfortable while entering at such high levels and may feel that the fund offers little scope for appreciation at that level,'' says a fund analyst.