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Rajiv Gandhi scheme :
Govt plans to allow tax benefits every year
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Investors may soon be allowed to avail themselves of tax benefits in Rajiv Gandhi Equity Savings Scheme (RGESS) every year. A formal announcement is expected in the Budget.
The present scheme allows an individual, with annual income up to Rs 10 lakh, to invest up to Rs 50,000 in certain equities and mutual fund schemes to get tax benefits for the first year. The investor gets a 50 per cent deduction of the amount invested from the taxable income for that year. This benefit is given only once under Section 80CCG of the Income-Tax Act 1961.
The new thinking has twin purposes — first to attract more investors into the equity market and second to provide an alternative for saving income tax.
“The Finance Ministry is actively considering making this scheme a regular tax-saving instrument rather than just for first-time retail investors with once in a lifetime tax savings,”
“A final decision on the modalities will be taken just before the Budget,” he added.
RGESS prescribes money to be invested in stocks listed under the BSE-100 or CNX-100, or those of public sector Navratnas, Maharatnas and Miniratnas. Follow-on public offers of such companies would also be eligible under the scheme.
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