As part of its attempts to increase retail participation and the reach of equity markets beyond the top cities, the Securities and Exchange Board of India (Sebi)? along with various industry bodies ? is trying hard to convince the government that the tax benefits of the Rajiv Gandhi Equity Savings Scheme (RGESS) be made available to investors every year.
According to persons familiar with the development, senior Sebi officials have already discussed the matter with bureaucrats of the capital market division of the finance ministry. Further, umbrella bodies representing stock-brokers and even mutual funds have made their own submissions for extending tax benefits on an ongoing basis every year.
Sources, however, add that government is not yet fully convinced with the idea of extension of tax benefits available under RGESS as it feels there are alternative avenues available to investors.
?Various sections of the market have submitted their suggestions on RGESS and we are looking into those,? said a senior government official from the finance ministry.
?With regards to tax benefits, instruments like ELSS (equity-linked savings scheme) are already available, so we are not sure if RGESS benefits need to be extended,? he said. Currently, the scheme is applicable to first-time investors who invest up to R50,000 and do not earn more than R10 lakh annually. Investors get to avail one-time tax benefits under the new Section 80CCG.
The lobbying for increased tax benefits comes at a time when various industry bodies are busy submitting their suggestions and demands to the government so that they can be factored in while planning the Union Budget. RGESS was initially proposed in Union Budget 2012-13 to encourage flow of saving in financial instruments and improve the depths of domestic capital market.
The recent past has seen mutual fund houses launching schemes that will be eligible for tax sops under RGESS. In past few weeks, IDBI MF, SBI MF, DSP BlackRock Investment Manager and Reliance MF have filed their offer document to launch schemes that will come under the RGESS ambit. Fund houses such as Kotak MF, Birla Sun Life MF and ICICI Prudential may also file offer documents to launch schemes under RGESS, say industry players.
