Comments
The much-talked about Rajiv Gandhi Equity Savings Scheme (RGESS), to encourage small investors to channelise their savings into domestic capital markets, has been notified by the Central Board of Direct Taxes (CBDT).
The scheme has been framed consequent to the introduction of Section 80-CCG in the Finance Act 2012.
Under this scheme, a one-time deduction for income tax purposes will be available to a “new retail investor.”
The new retail investor will be eligible for a deduction on the actual amount invested in ‘eligible securities’ in the first financial year, subject to maximum deduction limit of Rs 50,000.
No subsequent deduction
If the new retail investor has claimed a deduction in any assessment year, then no income tax deduction will be available for any subsequent assessment years under the scheme.
The deduction will be available to a ‘new retail investor’ whose gross total income for the financial year, in which investments are made under the scheme, is less than or equal to Rs 10 lakh.
Eligible securities will include equity shares falling in the list of equity declared as “BSE-100” or “CNX-100”; equity shares of public sector enterprises that are categorised as maharatna, navaratna or miniratna by the Central Government.
Also, units of exchange-traded funds or mutual fund schemes with RGESS-eligible securities as underlying, will be counted as eligible securities for investment.
Follow-on public offer of BSE-100 or CNX-100 and certain public sector enterprises, besides new fund offers of mutual funds, will also qualify as eligible securities.
Eligibility Criteria
Any resident individual, who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the scheme, will fall under the definition of ‘new retail investor’.
Also, any individual who has opened a demat account before the scheme’s notification, but has not made any transactions in the equity segment or the derivative segment till the date of notification, will be considered as ‘new retail investor’.
The holding period of eligible securities is three years, with fixed lock-in of first year and a flexible lock-in period of two years.
In the ‘flexible lock-in’ period, investors will be permitted to trade, subject to conditions.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.