FM moves to rejuvenate economy: Scope of Rajiv Gandhi Equity Scheme widened

The government on Friday extended the ambit of the Rajiv Gandhi Equity Scheme, which offers tax sops to first-time retail investors, to exchange-traded funds (ETFs) and mutual funds (MFs).

The scheme, announced in the 2012-13 budget, allows 50 per cent deduction of equity investment up to Rs50,000 from taxable income of the investor. This benefit would, however, be limited to those whose annual income is below Rs10 lakh.

''The scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an 'equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets,'' an official release said today.

The scheme is open to new retail investors, identified on the basis of their PAN numbers. This would include those who have opened a demat account but have not made any transaction in equity and /or in derivatives till date and all those account holders other than first account holders who wish to open a fresh account.

Those investors whose annual taxable income is equal to or less than Rs10 lakh are eligible for the scheme.

The maximum Investment permissible under the scheme is Rs50,000 and the investor would get a 50 per cent deduction of the amount invested from the taxable income for that year.