Mutual Funds eligible for RGESS Investments

by Manshu on January 28, 2013

in Investments

I wrote about the SBI RGESS fund and IDBI RGESS fund some time ago, and one thing that I wasn’t clear about is whether existing funds that satisfy the RGESS criteria will make their investors eligible for deduction or if there is any condition that prevents them from being eligible.

Nothing I read said they were ineligible, but I was wondering about this since I felt there is no reason for mutual funds to issue new funds when existing funds serve the exact same purpose (other than perhaps publicity that new fund attracts).

Rahul Chindaliya shared a link which explains how many existing mutual funds are eligible for RGESS exemption, and I also found that Religare has a page that lists out their RGESS eligible funds, and their Nifty ETF is listed there.

This should imply that all other Nifty ETFs (Also see: Comprehensive list of all Nifty Index funds and ETFs)  are also eligible for RGESS exemption, and if you so desire you invest in one of the existing ones instead of going for a brand new fund. This also means that existing funds that invest in other RGESS compliant securities are eligible as well.

I also came across an article in Livemint today which states that the government can expand the scope of RGESS and include more than just first time investors. If they were to do that in the next few days then that will mean that the scheme suddenly becomes interesting to a lot more people.

If you have been investing in Nifty ETFs or any of the other RGESS eligible securities this fiscal and you are a relatively new investor then I’d suggest you keep a track on this space because you might suddenly find that there is an exemption that you can take advantage of that didn’t exist before.

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{ 7 comments… read them below or add one }

Shiv Kukreja January 28, 2013 at 10:36 pm

Hi Manshu… I think the investors should not have high hopes of the changes in RGESS getting implemented this financial year. Even if the changes do get announced in this year’s budget, they would be effective next financial year.

Reply

Manshu January 29, 2013 at 7:34 am

Thanks Shiv. That’s likely how it will happen, but just on the small chance that something happens before this March 31st, some people may have a small windfall.

Reply

Ravi February 13, 2013 at 11:10 pm

hi manshu,
I already have demat account, Is it possible to open RGESS demat a/c in my wife name and claim tax benefit for me?

Reply

Manshu February 13, 2013 at 11:12 pm

No, that’s not possible.

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GANESH February 21, 2013 at 11:27 am

Dear Manshu ,

why its not possible to claim a tax benefit by investing in my wife name(Dependent to me)…..its possible undr Sc 80C why not under 80CCG.

Reply

Manshu February 21, 2013 at 3:49 pm

Dear Ganesh,

To the best of my understanding, not everything under 80C is eligible for deduction and that rule is created so you get the benefit where the expenses are naturally expected to be incurred for spouse or children but not so that people just invest money on their behalf and get deduction. For example, insurance premium for spouse is deductible but not mutual funds owned on their name.

For this since you are investing in mutual funds, it is natural for that investment to be done on your own name.

This at least is how I understand it but this is a new rule and my understanding may be incorrect so if anyone wants to share their thoughts please leave a comment.

Reply

GANESH February 21, 2013 at 8:17 pm

Dear Manshu,

Thank You .. for clearing my thought regarding to this wrong concept.

Reply

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