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In order to wean away household investments from gold purchase and encourage participation in stock markets, finance minister P Chidambaram has proposed to liberalise the Rajiv Gandhi Equity Savings Scheme.
The income limit to avail benefits under RGESS has been raised from R10 lakh to R12 lakh per annum and the tax deduction has been extended from one year to three consecutive years.
The maximum investment permissible under RGESS is R50,000 and investors get a 50% deduction of the amount invested from the taxable income for the year. Deduction under the scheme has now been expanded to cover investments in listed units of equity oriented funds.
“The household sector must be incentivised to save in financial instruments rather than buy gold,” said Chidambaram.
“A first-time retail investor can spread investments over a three year-period. He can plan investments for a longer period,” said Milind Barve, MD, HDFC MFs.
“The liberalisation of RGESS would boost flow of savings in capital markets by small investors,” said Parizad Sirwalla, partner, tax, KPMG India.
Hindustan Times, New Delhi, 01-03-2013