Finance Minister Mr. P Chidambaram has launched an equity scheme called Rajiv Gandhi Equity Savings Scheme, or RGESS, in an attempt to lure new investors to the stock market. Chidambaram said the finance ministry would come up with the necessary changes to the scheme as suggested by the Securities and Exchange Board of India (SEBI) in the Union Budget 2013, he said.
The highlight of RGESS is that it exempts 50 per cent of the investment from any kind of tax obligation. For instance, if someone invests Rs 50,000, the amount eligible for tax deduction from their income will be Rs 25,000.
He said the maximum amount that investors can avail benefits under RGESS is Rs 50,000. The scheme, will also have a lock-in period of three years – fixed lock-in during the first year, followed by a flexible lock-in for subsequent two years.
The RGESS is exclusively meant for first-time retail investors so the new didn’t come as a welcome surprise to the existing investors.
Further, only those people whose annual income is below Rs 10 lakh are eligible are eligible to invest in the scheme.
Analysts say the move, which comes weeks before the Budget, is aimed towards luring potential investors into the equity market.