Market regulator the Securities and Exchange Board of India (SEBI) will soon come out with guidelines on investments in the Rajiv Gandhi Equity Savings Scheme (RGESS) through exchange- traded funds (ETFs) and mutual funds.

The government on Friday allowed ETFs and mutual funds to launch the RGESS — 50% tax relief for first-time investors in the stock market, who earn less than Rs. 10 lakh a year and invest up to Rs. 50,000 in the scheme.

“SEBI is planning to come out with the guidelines for the scheme within a month and would address some concerns that have been raised,” said a senior SEBI official on Sunday.

Industry experts, however, remained sceptical about issues such as whether the Income-Tax department or SEBI would be responsible for monitoring investors and said that there would be more clarity after the market regulator issues the guidelines.

There are also concerns on whether the secondary market purchase of mutual funds and ETFs would be eligible under the scheme and whom could the first-time retail investors approach for the scheme.

The mutual fund industry stands to gain as RGESS combined with SEBI’s recent initiatives to extend the reach of mutual funds beyond the top 15 cities could assist fund houses to gain new markets.

Although the lock-in requirements may be diluted to 1 year from the current 3 years, with limited flexibility to trade and re-invest in subsequent 2 years, the proposals appear to be complex for first-time equity investors,” said Gautam Mehra, leader, asset management, PwC (India).