SEBI LOOKING @ RGESS

Market regulator Sebi is looking at how interest of RGESS investors can be safeguarded with regard to I-T relief even if fund houses return their money for failing to raise the targetted amount. As per Sebi regulations, if a new fund offer (NFO) is not able to garner the minimum amount, the fund house has to return the money to investors within a certain period, failing which it has to pay penal interest of 15 per cent to the investor.
With some fund houses not being able to mop up the minimum subscription for the RGESS, they would be required to return the money to all those who had invested in the scheme. However, in that case the investors would lose out on income tax relief to which they were otherwise entitled to. "We are looking into it and will soon come out with an approach paper on this. We don't want the people, who have legitimately applied in the hope of getting tax relief, to suffer. I am not saying there will be relaxations, I am just saying we are looking into it," Sebi chairman U K Sinha told reporters on the sidelines of an event.
"We have to find a process where the tax-savers are not left with disadvantages for reasons beyond their control," he said. The RGESS, announced in the FY13 Budget, seeks to provide tax benefits to the first-time investors in stock markets. Under the scheme, an individual with an income of under Rs 12 lakh would get tax incentives for investing up to Rs 50,000. Meanwhile, Sinha refused to comment on recommendations of the Financial Sector Legislative Reforms Commission which called for unifying financial sector regulators like Sebi, IRDA, FMC and PFRDA, under one entity.