Tax Saving Mutual Funds in India.?

I just came to know at Yahoo Answers that the principal amount invested in an ELSS would be included in the Income for the year of redemption. So, by investing in an ELSS;one is only deferring the Income tax payment.Might as well pay the tax now & invest the balance in a good diversified fund that offers you higher returns & liquidity as well (unlike 3 years lockin for ELSS). Am i correct?

That is not true. The current tax regime is EEE model and is expected to be replaced by EET model. But the Govt. is yet to implement it and hence it continues to be EEE model.

Go through the following article for a better understanding.

Good luck.

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