The Rajiv Gandhi Equity Saving Scheme, announced in 2012 -13 year's union Budget, is eyeing 1.5 crore new investors for the equity market. But, investment under the scheme may be restricted to top 100 or 200 shares on the BSE (Bombay Stock Exchange) and NSE (National Stock Exchange.)
Among all the taxpayers, there are about 1.5 crore people, with income up to Rs. 10 lakh, who don't have a basic demat account. There would be enough attraction for these people to invest in the equity market.
The Rajiv Gandhi Equity Saving new scheme will allow for income tax deduction of 50% to new retail investors who invest up to Rs. 50,000 directly in equities. It will have a lock-in period of 3 years, and will allow one time deduction. The scheme is not for existing investors.
To provide a safer environment, investments under the new scheme may initially be allowed only in the top 100 or 200 companies on the basis of market capitalisation listed on stock exchanges. Since investors have burnt their fingers mainly in mid-cap, small-cap and penny stocks, it is best to encourage them to invest first in bigger shares. Once they taste profit & feel that their money is safe, they can go for more investments.Restricting the investment in bigger shares was being considered. A decision in this regard and final details about the scheme were expected by the middle of this year.
For an investor who wants to book profits and exit before completion of the 3 year lock-in period, finance ministry are thinking of making a provision with a strict condition. Under such a provision, the investor may be asked to return the benefit (deduction of Rs. 25,000 for calculation of income tax) to the government.
The new scheme is being designed to encourage flow of savings in financial instruments & improve depth of the domestic capital and stock market.
Among all the taxpayers, there are about 1.5 crore people, with income up to Rs. 10 lakh, who don't have a basic demat account. There would be enough attraction for these people to invest in the equity market.
The Rajiv Gandhi Equity Saving new scheme will allow for income tax deduction of 50% to new retail investors who invest up to Rs. 50,000 directly in equities. It will have a lock-in period of 3 years, and will allow one time deduction. The scheme is not for existing investors.
To provide a safer environment, investments under the new scheme may initially be allowed only in the top 100 or 200 companies on the basis of market capitalisation listed on stock exchanges. Since investors have burnt their fingers mainly in mid-cap, small-cap and penny stocks, it is best to encourage them to invest first in bigger shares. Once they taste profit & feel that their money is safe, they can go for more investments.Restricting the investment in bigger shares was being considered. A decision in this regard and final details about the scheme were expected by the middle of this year.
For an investor who wants to book profits and exit before completion of the 3 year lock-in period, finance ministry are thinking of making a provision with a strict condition. Under such a provision, the investor may be asked to return the benefit (deduction of Rs. 25,000 for calculation of income tax) to the government.
The new scheme is being designed to encourage flow of savings in financial instruments & improve depth of the domestic capital and stock market.
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