Sebi directs exchanges to furnish list of RGESS-compliant securities

Capital market regulator Securities and Exchange Board of India (Sebi) on Thursday directed stock exchanges to furnish a list of Rajiv Gandhi Equity Savings Scheme (RGESS)-complaint stocks, exchange-traded funds (ETFs) and mutual fund schemes on their websites.

Exchanges 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 and CNX 100) and public sector undertakings (PSUs). ETFs and MFs with these stocks as underlying will also be eligible.

According to the Budget announcement, the government has introduced RGESS for providing income tax benefits for first-time capital market investors under a new section 80CCG. RGESS, notified by the Income Tax department on November 23, 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.

“Stock exchanges, depositories, mutual funds, AMCs, trustee companies and boards of trustees of mutual funds are directed to take note of the notification and take necessary steps to implement the scheme,” said Sebi in a circular on Thursday.

Similar to other tax-saving schemes, investments through RGESS will also have a three-year lock-in period but investors will be allowed to trade in the securities after the first year.

“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,” said the Sebi circular.