Rajiv Gandhi equity plan likely to be launched soon

THE finance ministry is likely to launch the Rajiv Gandhi Equity Scheme, which is aimed at boosting retail investments in the capital market, by August 15.

 

Officials from the department of economic affairs (DEA) would meet their counterparts in market regulator, the Securities and Exchange Board of India (Sebi), next week to finalise the details of the scheme, a senior finance ministry official said.

 

"We have sent the final rules on the Rajiv Gandhi Equity Scheme to Sebi and hope to launch it by August 15. Sebi's feedback needed for ease of operation," the official said.

 

In order to encourage savings and improve investment in capital markets, former finance minister Pranab Mukherjee in Union budget 2012-13 had announced the Rajiv Gandhi Equity Scheme, under which, 50 per cent tax deduction would be allowed to retail investors with annual income less than Rs 10 lakh, for investment up to Rs 50,000, with a lock-in period of three years.

 

Last month, Sebi had asked the government to route investment into the scheme through mutual funds for minimising risks associated with direct stock market investment for new investors.

 

A retail investor can avail the scheme only once in a lifetime. This is the firstever tax benefit scheme announced by the govern ment to encourage retail investors participation in the equity market.

 

Through this scheme, the government aims at channelise household savings into stock markets.

 

To make the scheme more attractive for retail investors, the ministry is also considering reduction in the lock-in period under the scheme to one year from the proposed three years. Under this scheme, 50% tax deduction will be allowed to investors with income of less than Rs 10 lakh Deductions are available for investment up to Rs 50,000, with a lock-in period of three years The ministry is also considering reduction in the lock-in period under the scheme to one year

 

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