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Rajiv Gandhi Equity Scheme opened to
investments through ETFs and MFs
Friday September 21, 2012 06:35:40 PM,
IANS
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New Delhi: To boost
retail investments in capital markets, the government Friday
approved the Rajiv Gandhi Equity Scheme (RGES) under which first
time investors with an annual income of Rs.10 lakh will get tax
benefits for putting in up to Rs.50,000.
The scheme which was announced in 2012 budget had allowed the tax
benefits for investments in stocks. But, Finance Minister P.
Chidambaram has now brought in exchange traded funds (ETFs) and
mutual funds (MFs) under the scheme.
The investor would get 50 per cent tax deduction on the amount
invested.
"We have interpreted the relevant section of the Income Tax Act
and think it can include ETFs and MFs," Chidambaram told reporters
while announcing the operational features of the scheme.
He said cutting investments in gold was one of the purpose of the
scheme.
"It will act as an alternative financial instrument and encourage
more people to invest in this instrument rather than gold, which
is a dead instrument."
The new scheme will not only encourage the flow of savings and
improve the depth of domestic capital markets, but also promote an
"equity culture" in India, the finance minister said.
People who have opened the Demat Account but have not made any
transaction in equity and/or in derivatives till the date of
notification of this Scheme and all those account holders other
than the first account holders who wish to open a fresh account
can avail the scheme, a finance ministry statement said.
The total lock-in period for investments under the scheme would be
three years including an initial blanket lock-in period of one
year, commencing from the date of last purchase of securities
under RGESS.
The revenue department will notify the scheme and Securities and
Exchange Board of India (SEBI) will issue the relevant circulars
to operationalise the scheme in the next two weeks, the ministry
said.
Money under the scheme would be invested in stocks listed under
the BSE100 or CNX100, or those of public sector undertakings which
are Navratnas, Maharatnas and Miniratnas.
Follow-on Public Offers (FPOs) of the above companies would also
be eligible under the scheme. IPOs of PSUs, which are getting
listed in the relevant financial year and whose annual turnover is
not less than Rs.4,000 crore for each of the immediate past three
years, would also be eligible, the finance ministry said.
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