As announced in the Union Budget 2012-13, the Finance Act 2012 has introduced a new section 80 CCG on ‘Deduction in respect of investment made under an equity savings scheme’ namely RGESS - Rajiv Gandhi Equity Savings Scheme, 2012 to give tax benefits to new investors who invest up to Rs. 50,000 & whose gross total annual income is less than or / equal to Rs. 10 lakhs.
AMCs / Trustees shall ensure that RGESS eligible Exchange Traded Funds (ETFs) and Mutual Funds (MFs) schemes are in compliance with the aforementioned notification.
Encourage savings in financial instruments..!
The objective of the scheme is to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market.
Stock exchanges, Depositories, MFs (Mutual Funds), Asset Management Companies (AMCs), Trustee Companies and Boards of Trustees of Mutual Funds are directed to take note of the notification & take necessary steps to implement the scheme.
With regard to implementation of the MoF notification, the following is clarified..!
RGESS Eligible MF Schemes..!:
For RGESS eligible close ended MFs schemes, advice given by AMCs to the depository for extinguishment of units of close-ended schemes upon maturity of the scheme shall be considered as settled through depository mechanism and therefore RGESS compliant.
AMCs shall disclose that the concerned RGESS eligible ETFs ( Exchange Traded Funds) and Mutual Fund schemes is in compliance with the provisions of RGESS guidelines notified by Ministry of Finance.
RGESS Eligible Shares..!:
The notification states that the eligible securities brought into the demat account will automatically be subject to lock in during the first year, unless the new investor specifies otherwise & for such specifications, the new retail investors shall submit a declaration in Form B indicating that such securities are not to be included within the above limit of investment.
It is clarified that such declaration shall be submitted by an investor to its Depository Participant within a period of one month from the date of transaction.
For transactions undertaken by investors through their RGESS designated demat account, Depositories may seek necessary transactional details from stock exchanges viz. Actual Trade value, Trading date, Settlement number, etc, for the purpose of enforcing lock-in and for generating reports mandated vide Ministry of Finance notification on RGESS.
On receipt of such request from depositories, stock exchanges shall provide the details to depositories on an immediate basis. It shall also be ensured that a uniform file structure is used by stock exchanges and depositories for such intimation of transaction details.
Stock exchanges shall furnish list of RGESS eligible stocks / or ETFs / or MF schemes on their website.
Further, the list shall also be forwarded to the depositories at monthly intervals & whenever there is any change in the said list.
For this purpose, MFs / AMCs shall communicate list of RGESS eligible MF schemes / ETFs to the stock exchanges.
Stock exchanges and the depositories are directed to:
* Make necessary amendments, if any, to the relevant bye-laws, rules and regulations for the implementation of the scheme.
* Create wide publicity of the scheme among the investors and market participants, including through investor programs and displaying details on their website.
* communicate to SEBI (Securities and Exchange Board of India), the status of implementation of the provisions of this circular, as applicable.
* MFs / AMCs are directed to create wide publicity of the scheme among the investors, including displaying details on their website
by
SEBI (Securities and Exchange Board of India)
Maninder Cheema
Deputy General Manager
Email ; maninderc@sebi.gov.in
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