The regulator has asked stock exchanges to shortlist shares eligible for Rajiv Gandhi Equity Savings Scheme (RGESS).
SEBI in its circular issued on Thursday has asked stock exchanges to shortlist stocks, mutual funds and exchange traded funds (ETFs) eligible for RGESS on their websites. RGESS was announced in the 2012-13 union budget to attract new retail investors in equity markets.
Close-ended schemes of mutual funds and exchange traded funds (ETFs) which are compliant with RGESS norms will also be eligible for RGESS. Shares of PSU firms categorised as maharatna, navratna or miniratna by the central government will be eligible for RGESS. Follow on public offers and IPOs of PSUs will also be eligible.
The ministry of finance notified the guidelines of RGESS on November 23rd. New retail investors with annual income of Rs 10 lakh and below are eligible to claim a deduction on investment of Rs 50000 under sub-section (1) of section 80CCG of the Income-tax Act, 1961.
Investors could invest either in lump sum or by installments. Investors will not be permitted to buy or sell their holdings for the first year. In the subsequent years, investors could trade. They have to hold these shares for a cumulative period of 270 days during each of the two years of the flexible lock-in period. The value of securities under RGESS will be considered compliant for the number of days where value of the investments within the flexible lock-in period is equal to or higher than the amount claimed for deduction.
RGESS investor’s accounts will be automatically converted into ordinary account after the three years. Cost of acquisition like stamp duty, securities transaction tax, and service tax cannot be included under the investment of Rs 50000.
Depositories will have to take the trade details of RGESS investors to keep a check on enforcing lock-in period. SEBI has directed AMCs to publicize this scheme among investors. The scheme will be launched after the norms are notified in the official gazette.
