My niece may opt for new tax regime. Should she still invest in ELSS funds?

My niece is planning to make investments for tax saving. I asked her to pick ELSS because it’s always the best option for a first-time investor. It has a tax advantage also. But from next financial year onwards, it may change as her salary is very low, that might not be true. So it may be better to go with the new tax scheme. That means she can’t use ELSS for tax saving purposes. But still do you think it's better to invest in ELSS? Especially because ELSS is going to be less effective for low income salaried class, the fund flowing into the ELSS will also come down from next FY onwards.
--Mohamed Shafi

You should always work with real numbers before deciding to opt for the new tax regime. Include the deductions and exemptions you are currently claiming in your calculations. If you decide to opt for the new tax regime, you don’t have to invest in ELSS funds to save taxes. You can choose an equity mutual funds based on your risk appetite. Tax saving mutual funds are mostly run like flexi cap schemes. If you have a moderate risk profile, you can consider investing in flexi cap funds. If you have a conservative risk profile, you can invest in large cap funds. Since she is a new investor, she should not invest in high risk options like mid cap schemes, small cap funds, sector schemes, etc. Educate her that investing a small amount regularly over a long period of time will help her to build a large corpus.

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