6 facts about proposed Rajiv Gandhi Equity Saving Scheme

Overview on the proposed Rajiv Gandhi Equity Saving Scheme

Have you heard of the proposed Rajiv Gandhi Equity saving Scheme by Government of India?  This proposal is still under discussion by Governmetn of India and the guidelines are expected to come up in this 1st week of September, 2012.

What is this proposed Rajiv Gandhi Equity Saving Scheme all about?

This saving scheme was proposed by Government of India in 2012 Budget to channelize household savings into capital market. As per the information available in Budget 2012, 50% tax deduction would be available (whose annual income is upto Rs 10 lacs) to the retail investors for investment up to Rs 50,000 in capital markets

6 Facts about proposed Rajiv Gandhi Equity Saving Scheme

  1. Retail investor who want to invest upto Rs 50,000 in capital markets would benefit from this scheme
  2. A retail investor can participate only once in a life time in this scheme
  3. The amount of investment eligible under this scheme is Rs 50,000
  4. Tax deduction can be claimed for 50% i.e. if an investor invested, Rs 50,000, he can claim a tax deduction of Rs 25,000
  5. The scheme was proposed with a lock-in period of 3 years. There are several requests to Government to reduce this period of investment.
  6. Recently SEBI suggested to Government under this scheme, the investments should be done through mutual funds and not directly into stock market to minimize the risk.

Conclusion: I would publish a detailed note once the complete guidelines are published this week. Nevertheless such schemes would encourage retail investors to participate in the capital markets. Retail investors should exercise caution while investing in stock markets, as they are risky. Look for good stocks before investing. You can read my article 23 tips on how to be successful in stock/share trading.

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Suresh KP

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