RGESS (Gandhi Equity Savings Scheme)is aimed at encouraging first time retail investors to invest in stock markets through tax concessions.
The RGESS, Finance Minister Mr. Chidambaram said, will "give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs 10 lakh. It will act as alternative financial instrument and encourage more people to invest in this instrument rather than gold, which is a dead instrument".
The RGESS scheme was announced by the then Finance Minister Mr. Pranab Mukherjee in his 2012-13 budget speech.
According to Mr. Chidambaram, "the scheme not only encourages the flow of savings & improves the depth of domestic capital markets, but also aims to promote an 'equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets. Besides the equities of blue chip private and public sector compaies. The investors under the scheme would also be permitted to invest through Mutual Funds and listed ETFs (Exchange Traded Funds
As regards the withholding tax on oveseas borrowings, Mr. Chidambaram said that appropriate amendments would be made in the Income Tax Act, 1961, under which the interest income of a non-resident investor will be taxed at reduced rate of 5% instead of 20%.
Src: PTI
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