With an aim to tap the year-end rush for investment products offering tax benefits, asset management companies (AMCs) are lining up numerous mutual funds eligible for the newly created Rajiv Gandhi Equity Savings Scheme (RGESS).
While half a dozen fund houses have filed papers with market regulator Securities and Exchange Board of India (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, the period ending March 31 sees tax-saving or ELSS funds garnering chunky inflows.
The new scheme provides for investments made by 'New Retail Investor' in such schemes and securities qualifying for 50% 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.