Info: Rajiv Gandhi Equity Savings Scheme Section 80CCG New Deduction up to Rs 25000/-

Rajiv Gandhi Equity Savings Scheme Section 80CCG New Deduction up to Rs 25000/-

Update: while Passing the Finance Bill in Lok sabha, Govt has inserted a new Clause of deduction section 80CCG i.e for Rajiv Gandhi equity saving scheme (RGESS).Deduction u/s  80CCG can be claimed subject to  following conditions.

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:

 

(a) The assessee is a resident individual (may be ordinarily resident or not ordinarily resident)

 

(b) His gross total income does not exceed Rs. 10 lakhs;

 

(c) He has acquired listed shares in accordance with a notified scheme;

 

(d) The assessee is a new retail investor as specified in the above notified scheme;

 

(e) The investor is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;

 

(f) The assessee satisfies any other condition as may be prescribed.

 

Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares. However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year.

 

Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

 

After reading this proposal .Few doubts has been cleared but not all .Few point which needs clarification /details regarding actual implementation of the scheme.

 

1. As per Condition (d) new retail investor can avail this deduction but what is the meaning of new retail investor is not prescribed or is to be prescribed .
2. As per conditions laid down under section 80CCG ,deduction shall be withdrawn in case of  person fails to satisfy the conditions in after availing the deduction. Suppose a person has claimed the deduction when his income is less than 10 lakh ,if his income for the next year increased from 10 lakh then whether deduction will be revered or not it is not very much clear .If it is to be revered then person who's income is near to 10 lakh have to think twice before claiming this deduction.
3. This deduction can be availed only once by Individual .If he has claimed any amount in a financial year then he can not claim deduction u/s 80 CCG again . Suppose person has invested Rs 10000 in Fy 2012-13 and claimed Rs 5000 u/s 80CCG then in next year he can not claim any amount even if he has invested more money in equity as per scheme .

we will update you as and when new details are available with us.

 

Original Information in Budget Speech.

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A new scheme called Rajiv Gandhi Equity Savings scheme is proposed in the Union Budget 2012-13 to encourage flow of saving in financial instruments and improve the depths of domestic capital market. 

 

The Union Finance Minister ShriPranab Mukherjee in his Budget speech in LokSabha today said that the scheme allows for income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakhs. The scheme will have lock-in period of three years. The details will be announced in due course. 

 

No provision in Finance Bill 212 has been provided ,means details will be notified at later stage.

 

Finance Minister has mentioned above this scheme as said as under.

 

To encourage flow of savings in financial instruments and improve the depth of domestic capital market, it is proposed to introduce a new scheme called Rajiv Gandhi Equity Savings Scheme. The scheme would allow for income tax deduction of 50 per cent to new retail investors, who invest up to ` 50,000 directly in equities and whose annual income is below ` 10 lakh. The scheme will have a lock in period of 3 years. The details will be announced in due course.

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Read more: http://www.simpletaxindia.net/2012/03/rajiv-gandhi-equity-savings-scheme.html#ixzz1uRTmK3qo

Read more: http://www.simpletaxindia.net/2012/03/rajiv-gandhi-equity-savings-scheme.html#ixzz1uRTMsgbL

 

 

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