This entry is part 2 of 5 in the series Birla New Fund Offer

Birla SunLife Mutual Fund launched new fund offer Birla SL Focused Equity Fund-Series 3, a closed ended scheme. The NFO Opens for subscription on 7 Oct 2014 & closes on 21 Oct 2014.  No entry load will be applicable for the scheme.

Birla SL Focus Equity Fund has got Rajiv Gandhi Equity Saving Scheme (RGESS) status. As per Section 80CCG of the Income Tax Act, investment made by “New Retail Investor” having an annual income upto 12 lakh. In this scheme will qualify for a 50% deduction of the actual amount invested from the taxable income of the FY. The maximum investment permissible for claiming deduction in a financial year is 50,000.

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Scheme Details

Key Scheme Feature 
Scheme NameBirla SL Focused Equity Fund - Series 3
Fund HouseBirla Mutual Fund
TypeClosed Ended - 3 years
CategoryDiversify
BenchmarkCNX 100
Option Growth / Dividend
Fund ManagerMr. Mahesh Patil
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Scheme NameBirla SL Focused Equity Fund-Series 3 (RGESS)
NFO Open7 Oct 2014
NFO Close21 Oct 2014
Scheme Type3 year close ended scheme
PlanRegular
Minimum Application AmountRs 5000 and in multiples of Rs 1 thereafter
Load StructureFor Purchase during NFO : Entry & Exit - NIL

Cheque Details            : “Birla SL  Focused Equity Fund-Series 3”

Who can Invest

This product is suitable for investors:

  • Seeking long term capital appreciation
  • With risk appetite of investing in Equities
  • Investors willing to take exposure in equity and equity related securities

Objective

Investment Objective for Series 3 Issue

  • To generate long term capital appreciation from a diversified portfolio of predominantly equity and equity related securities , including equity derivatives, in the Indian market with focus on top 100 stocks.
  • Quality companies with potential high growth using strong fundamental research processes

Where will Scheme Invested

Large Cap stocks : Equity share of Top 100 listed companies in india. i.e. which are part of BSE100 or CNX100 Index on the day of purchase.

PSU Stocks : Public Sector Enterprises (PSE) which are categorized as Maharatna, Navratna or Miniratna by Central Government. IPO of PSEs which has at least 51% Govt. Shareholding, and annual shareholding of at least 4000 cr, during each of the preceding three years.

Unit of Mutual Fund Schemes or ETF which invests in the said eligible securities as per RGESS, provided they are listed and traded on a stock exchange and settle through a depository mechanism.

IPOs/ NFOs of above mentioned schemes/companies.

 

 

Tax Benefit-RGESS

Rajiv Gandhi Equity Savings Scheme or RGESS is a new equity tax advantage savings scheme for equity investors in India, with the stated objective of “encouraging the investment of savings of the small investors in the domestic capital markets.”‘Rajiv Gandhi Equity Savings Scheme, 2013’ (RGESS guidelines) shall be applicable for claiming deduction in the computation of total income of the assessment year relevant to a previous year, on account of investment in eligible securities, under sub-section (1) of section 80CCG of the Income-tax Act, 1961.The tax deduction in terms of RGESS guidelines shall be available to a ‘new retail investor’ who complies with the conditions of the RGESS and whose gross total income for the financial year in which the investment is made under RGESS is less than or equal to twelve lakh rupees.

Maximum Investment Permissible
The maximum Investment permissible for claiming deduction under RGESS is Rs. 50000.
Tax Benefit 
The investor would get a 50% deduction of the amount invested from the taxable income for that year u/s 80CCG. The benefit is in addition to deduction available u/s Sec 80C.
Salient features of the RGESS are as under:
Eligibility: The tax deduction in terms of RGESS shall be available to a ‘new retail investor’ who complies with the conditions of the RGESS and whose gross total income for the financial year in which the investment is made under RGESS is less than or equal to twelve lakh rupees‘New Retail Investor’ shall mean the following resident individual:

  1. any individual who has not opened a demat account and has not made any transactions in the derivative segment before the date of opening of a demat account or the first day of the initial year, whichever is later.;
  2. any individual who has opened a demat account before the RGESS notification but has not made any transactions in the equity segment or the derivative segment before the date he designates his existing demat account for the purpose of availing the benefit under RGESS or the first day of the initial year, whichever is later.
    and any individual who is not the first account holder of an existing joint demat account shall be deemed to have not opened a demat account for the purposes of the RGESS.

Further, ‘Initial Year’ means

    1. the financial year in which the investor designates his demat account as RGESS account and makes investment in the eligible securities for availing deduction under RGESS; or
    2. the financial year in which the investor makes investment in eligible securities for availing deduction under RGESS for the first time, if the investor does not make any investment in eligible securities in the financial year in which the account is so designated.

Procedure at time of opening or designating of demat account: The new retail investor shall follow the following procedure at the time of opening or designating a demat account:

    1. the new retail investor shall open a new demat account or designate his existing demat account for the purpose of availing the benefit under RGESS;
    2. the new retail investor shall submit a declaration in prescribed form to the depository participant who will forward the same to the depository for verifying the status of the new retail investor;
    3. the new retail investor shall furnish his Permanent Account Number (PAN) while opening the demat account or designating the existing demat account as a Rajiv Gandhi Equity Savings Scheme eligible account, as the case may be.

The new retail investor shall be eligible for a deduction under sub-section (1) of section 80CCG of the Income Tax Act, 1961 in respect of the actual amount invested in eligible securities, subject to the maximum investment limit of fifty thousand rupees.

Amongst other Eligible Securities, the Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) that have RGESS eligible securities as their underlying and that are listed and traded in the stock exchanges and settled through a depository mechanism have also been designated as eligible securities under RGESS.

The maximum Investment permissible for claiming deduction under RGESS is ` 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.

The new retail investor who has claimed a deduction under sub-section (1) of section 80CCG of the Act, for the assessment year 2013-14, shall not be allowed any deduction under the Scheme for any subsequent assessment year; In other words, for the assessment year 2013-14 deduction under section 80CCG is one time deduction and is available only in one assessment year to the extent of permissible deduction. However, this provision has been amended from the assessment year 2014-15. The modified provision permits deduction for three consecutive assessment years, beginning with assessment year relevant to the previous year in which the eligible securities under RGESS are first acquired. The investor may invest in one or more financial years in a block of three consecutive financial years beginning with the Initial Year. If the investor does not invest in any financial year following the Initial Year, he may invest in the subsequent financial year, within the three consecutive financial years beginning with the Initial Year.

Accordingly, investor who has invested in accordance with Rajiv Gandhi Equity Savings Scheme, 2012 shall continue to be governed by the provisions under RGESS 2012 to the extent it is not in contravention of the provisions under RGESS 2013 and shall also be eligible for the benefit of investment made in accordance with Rajiv Gandhi Equity Savings Scheme, 2013 for the financial years 2013-14 and 2014-15.

To benefit the investors, the investments are also allowed to be made in installments in the year.

The eligible securities brought into the demat account, as declared or designated by the New Retail Investor, will automatically be subject to lock-in during its first year unless the New Retail Investor submits a declaration (within one month from the date of transaction) in the prescribed format to the depository participant indicating that such securities are not to be included within the above limit of investment for claiming tax deduction.

The new retail investor shall not be permitted to sell, pledge or hypothecate any eligible security during this fixed lock-in period.

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