The Indian Capital market regulator SEBI (Securities and Exchange Board of Indiai) on recently directed stock exchanges to furnish a list of RGESS (Rajiv Gandhi Equity Savings Scheme)complaint stocks, ETFs (exchange-traded funds) and close-ended MF (mutual fund) schemes on their web sites.
SEBI said in a circular on recently, “Stock exchanges, depositories, mutual funds, AMCs, trustee companies & boards of trustees of mutual funds are directed to take note of the notification and take necessary steps to implement the scheme.
For transactions undertaken by investors through their RGESS-designated demat account, depositories may seek necessary transactional details from stock exchanges... for the purpose of enforcing lock-in and for generating reports mandated vide the ministry of finance notification on RGESS”
The Exchanges BSE and NSE will have to forward this list to depositories on a monthly basis and whenever the list undergoes any change. Meanwhile, asset management companies will have to send the list of RGESS eligible schemes and ETFs to stock exchanges.
The eligible stocks for this scheme include top 100 listed stocks ( BSE 100 & CNX 100) and PSUs (public sector undertakings). ETFs & MFs with these stocks as underlying will also be eligible.
Only New Retail Investors..!
According to the central Budget announcement, the govt. has introduced RGESS for providing income tax benefits for first time capital market investors under a new income tax section 80 CCG.
The government has already announced tax benefits to new investors who invest up to.50,000 a year in this scheme. The government has already announced tax benefits to new investors who invest up to Rs. 50,000 a year in this scheme. Income tax benifit is 50% amount that is Rs.25,000 only deduct from salary and Income.
RGESS, notified by the Income Tax department on November 23, 2012 will be only open to new retail investors, who will be identified on the basis of their PAN numbers. First time investors who have opened their demat accounts but have not transacted yet will also be eligible.
Lock In Period..!
Similar to other tax-saving schemes, investments through RGESS will also have a 3 year lock-in period. But investors will be allowed to trade in the securities after the first year.
The new retail investor shall be permitted a grace period of three trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account & such securities shall be deemed to have been purchased in the financial year itself, the government had said in its notification.
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