The struggling asset management industry has sought a clarity on the proposed Rajiv Gandhi Equity Saving Scheme (RGESS), announced in the Union Budget, saying it is unclear whether the MF industry can participate in it or not.

The scheme allows 50 per cent tax deduction for the first time investors in stock markets, having an annual income of under Rs 10 lakh, investing up to Rs 50,000 in stocks. It will have a lock-in period of three years and provides first- ever tax benefit for direct investments in stocks.

“There is no clarity on how the scheme will take shape. It is difficult to say at this time as the government hasn’t rolled out anything. Whether fund houses will be allowed to participate, whether it is direct, how it is to be done, there is no clarity,” said a fund manager who did not want to be named.

Fund houses said it would be better for the first time investors to invest in the equity scheme through AMCs.

“It would have been better if the investors could have gone from the MF route instead of directly participating in the equities market,” a fund manager from a large fund house said on the condition of anonymity.

“The introduction of the scheme is a clear positive for the equity market by way of increased long-term investor participation,” said Mr Nimesh Shah, Managing Director and Chief Executive, ICICI Prudential AMC.

Echoing similar sentiment, Tata Mutual Fund Chief Executive, Mr Sanjay Sachdev said, “capital markets—related measures such as this scheme and reduction in STT on delivery transactions will provide the much—needed impetus to attract small investors to the markets.”

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