The finance
ministry on recently notified the Rajiv Gandhi Equity Savings Scheme (RGESS)
meant to encourage capital market investments by new retail investors, allowing
them a deduction from their taxable income of a maximum of Rs. 50,000 for three
consecutive years for investments in select securities.
The move is also
likely to benefit the central government's disinvestment programme as IPOs and
follow-on offers of state-run companies are classified as eligible securities
under the scheme.
The revenue
department said in the notification that investments in BSE 100 & CNX100 scrips, equity shares of state-owned
companies in the class of Maharatna, Navaratna or / Miniratna and units of
mutual funds or exchange-traded funds with any of the specified securities as
underlying assets would be eligible for the deduction.
Investors, however,
have to hold on to their investments in these securities for three years and
file returns, failing which the benefit will be withdrawn.
The scheme is
available for new retail investors with an annual income of Rs. 12 lakh or
/ less. The benefit of deduction of the
entire invested amount upto Rs. 50,000 will be available for three consecutive
years only.
Investments in IPOs
of state-run companies scheduled for getting listed and having a turnover of
Rs. 4,000 crore for three previous years are also eligible for the benefit of
deduction.
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