Objective
Ø For encouraging direct investment into equities.
Ø To encourages the flow of savings
Ø Improves the depth of domestic capital markets,
Ø To promote an equity culture in India.
Ø To widen the retail investor base in the Indian securities markets
Ø To discourage investment in Dead instrument like Gold
Summary
This was initially proposed in this year's Budget for providing income tax benefit for first-time capital market investors. Investor can Invest directly or through exchange traded funds (ETFs) and mutual funds (MFs) ) Investments need to be made in top-100 listed stocks (BSE 100 and CNX 100) and public sector undertakings (Navratnas, Maharatnas and Miniratnas) ETFs and MFs with these stocks as underlying will only be eligible. Investments in follow-on public offerings (FPO) of the above companies and initial public offerings (IPOs) of PSUs with a turnover of more than Rs 4,000 crore would also be eligible under this scheme.
The scheme is exclusively for first time retail investors (to be tracked through PAN number) with annual income of below Rs 10 lakh. The maximum investment permissible under the scheme is Rs 50,000 Investor would get a 50% deduction of the amount invested from the taxable income for that year. Investments through RGESS also will have a three year lock-in but investors will be allowed to trade in the securities after the first year. Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The government has said that the tax benefit will be withdrawn if an investor fails to meet the conditions stipulated for the scheme.
Detailed Operational Notification will be issued shortly by the Income tax department and SEBI The scheme is exclusively for first time retail investors (to be tracked through PAN number) with annual income of below Rs 10 lakh. The maximum investment permissible under the scheme is Rs 50,000 Investor would get a 50% deduction of the amount invested from the taxable income for that year. Investments through RGESS also will have a three year lock-in but investors will be allowed to trade in the securities after the first year. Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The government has said that the tax benefit will be withdrawn if an investor fails to meet the conditions stipulated for the scheme.
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