Market regulator has also asked bourses to put out a list of eligible ETFs & MFs on their websites
Capital market regulator Sebi has asked stock exchanges to provide a list of eligible stocks for the Rajiv Gandhi Equity Savings Scheme (RGESS) which was introduced in this year's budget to encourage small, retail investors to put money in stocks.
The government has already announced tax benefits to new investors who invest up to . 50,000 a year in this scheme.
Stock exchanges will have to also furnish a list of eligible exchange traded funds and mutual fund schemes on their websites. Fund houses will have to come out with special plans under Rajiv Gandhi Equity Savings Scheme (which was initially restricted to direct stock investments).
The regulator, in a release on Thursday, also said that the eligible securities brought into the demat account will automatically be subject to a lock-in during the first year, unless the new investor specifies otherwise.
"For RGESS eligible close-ended mutual fund schemes, advice given by asset management companies 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 complaint," said the regulator.
Sebi said in case of involuntary corporate actions where investors have no choice in the matter --for example, in actions like demerger of companies -- the compliance status of RGESS demat account should not change. But, where investors have the option to exercise their choice and, thereby, result in debit of securities -- for example, buy-back -- the same should be considered as a sale transaction for the purpose of the scheme.
Investors whose gross total income for the financial year in which the investment is made under the scheme is less than or equal to . 10 lakh can avail tax deduction. Retail investors shall be eligible for a deduction under Section (1) of Section 80 CCG of the Income Tax Act in respect of the actual amount invested in eligible securities. "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 and such securities shall be deemed to have been purchased in the financial year itself," the government had said in its notification.
However, the deduction claimed will be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the scheme is violated.
on BSP FDI Support
MUMBAI Benchmark indices clawed back from their day's lows to close 0.5% higher in the last half hour of trade after BSP supremo Mayawati said she her party will vote with the government in the Upper House in favour of FDI in multibrand retail.
Both Sensex and Nifty, which traded in the red for most part of the trading session, closed up by 0.5% each at 19486.8 and 5930.9 on Thursday. Retail stocks, having run up substantially over the past two months, gained marginally on the news. Pantaloon Retail, which has rallied more than 50% since mid-September when the government said it would allow 51% FDI in multibrand retail, gained half a percent at . 239.15 while Shoppers Stop rose almost a percent to . 468.05. Trent ended down 0.05% to . 1,269.7.
While the outlook for the market was upbeat that for retail stocks was mixed with HDFC Securities' MD & CEO Aseem Dhru advising profit-booking "considering the recent run up" in a few retail counters, Chokkalingam G, CIO, Centrum Wealth, said, "Multibrand retail FDI, once approved, will improve outlook of retail players, particularly Pantaloon which has monetised some of its assets and reduced debt."— Our Bureau