Fund houses have started lining up mutual fund offerings focused on the Rajiv Gandhi Equity Savings Scheme (RGESS), which aims to attract first-time small investors into the capital market by offering them tax benefits.
Two fund houses - Birla Sun Life and Sundaram Mutual Fund - have filed offer documents with capital market watchdog Securities and Exchange Board of India (Sebi) to launch the tax saving scheme (RGESS), while others may soon follow suit.
Filing draft papers is mandatory before launching new schemes and Sebi usually takes about three-four weeks to clear such schemes.
Currently, there are more than 20 RGESS funds. According to market analysts, fund houses are gearing up to launch RGESS, ahead of tax season, in order to cash in on good equity market conditions.
Usually, the period ending March 31 sees tax-saving funds garnering chunky inflows.
"The current equity market conditions are conducive for investors to take long-term exposure," Franklin Templeton Mutual Fund managing director Vivek Kudva said.
In order to encourage flow of savings in the financial instruments and improve the depth of the domestic capital market, Sebi last year announced the framework for Rajiv Gandhi Equity Savings Scheme.
Under the scheme, new investors can avail tax benefits who invest up to Rs 50,000 in the stock market and whose gross total annual income is less than or equal to Rs 10 lakh.