Mutual funds sport 'Rajiv Gandhi Equity Savings Scheme' tag to tap tax-saving season flows

With an aim to tap the year-end rush for investment products offering tax benefits, the asset management companies (AMCs) are lining up numerous mutual fund schemes eligible for the newly created Rajiv Gandhi Equity Savings Scheme (RGESS).

While half a dozen fund houses have filed papers with market regulator Sebi for new RGESS products, AMCs like Kotak, Quantum, Goldman Sachs, Motilal Oswal and Religare have also informed the market intermediaries about certain existing schemes that would be eligible for RGESS benefits.

According to experts, the move to declare existing schemes as 'RGESS-eligible' will help fund houses avoid expenses related to new fund launch, attract investors who prefer track record and tap tax-saving season inflows.

Usually, this period ending March 31 sees tax-saving or ELSS funds garnering chunky inflows.

Kotak SENSEX ETF, Quantum Index Fund, MOSt Shares M50, Religare Nifty ETF and four schemes for Goldman Sachs MF – GS Nifty BeES, GS Junior BeES, GS Bank BeES and GS S&P Shariah BeES - are among the existing schemes to be eligible for RGESS benefits.

Investments in shares forming part of BSE-100 or CNX-100 indices, or those of PSUs which are Navratnas, Maharatnas and Miniratnas are eligible for RGESS benefits. Besides, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) investing in RGESS eligible securities are also eligible for RGESS benefits.

The new scheme provides for investments made by 'New Retail Investor' in such schemes and securities qualifying for 50 per cent deduction of the actual amount invested from taxable income of the financial year. The maximum investment permissible for claiming deduction in a year is Rs 50,000.

The deduction will be available only from the total income of the assessment year relevant to the previous year in which the investment in eligible schemes is made.

As per RGESS, an investor who has claimed the benefit in any assessment year under any RGESS scheme cannot claim this benefit again under that or any other RGESS scheme in any other assessment year.

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