Rajiv Gandhi Equity Saving Scheme guidelines on Monday

NEW DELHI: The government may announce on Monday the guidelines for the much awaited Rajiv Gandhi Equity Savings Scheme (RGESS) aimed at channelising household savings in the capital market.

"The details of the scheme announced in budget has been finalised and the guidelines is likely on September 3," a senior Finance Ministry official said.

Under the scheme proposed in Budget 2012, 50 per cent tax deduction would be allowed to retail investors (with annual income of up to Rs 10 lakh) for investment up to Rs 50,000 in capital markets.

A retail investor can avail the scheme only once in a lifetime.

Originally the government had proposed a three-year lock-in period for such investments, but sources said the time could reduced to make the scheme more attractive.

Market regulator Sebi had recently suggested to the government to route investment into the scheme through mutual funds for minimising risks associated with direct stock market investment for new investors.

On August 17 Finance Minister P Chidambaram said government has also taken note of the recommendation of Sebi that the RGESS should also "provide for investments in equity schemes of mutual funds which have the securities allowed under RGESS as the underlying."

Chidambaram said that he has asked the Department of Economic Affairs to examine the recommendation of Sebi and

"I expect that it would be possible to take a decision shortly," he had said.

This is the first-ever tax benefit scheme announced by the government to encourage retail investors participation in the equity market.
By offering this scheme, the government aims to channelise household savings into stock markets.