Government announced Rajiv Gandhi equity saving scheme 2012 recently in budget. Income tax department issued a notification no. 51 dated 23 November 2012 about the new rajiv Gandhi equity saving scheme 2012. This equity saving scheme allows assessee to invest in share market in equities upto Rs. 50000 and avail tax benefit on 50% on investment made in retail share market by the assessee. There are some key points of Rajiv Gandhi equity saving scheme 2012 which are as follows.
- The investor should have income of less than Rs. 10 lakhs in a year,
- The benefit under the scheme will be given to the first time investors into equity market only.
- investments will be subject to lock-in period of three years
- If the assessee has claimed and has been allowed a deduction under this section for any assessment year in respect of any amount, he shall not be allowed any deduction under this section for any subsequent assessment year. This is as per Section 80CCG
Experts and analytics have criticize this scheme because investing directly in the share market by retail investor is always a risky business. Share market is always risky as the markets can go up or down anytime. Some experts said that the money of the assessee should be rout from the mutual fund option. Investing directly in the share market needs knowledge of share market up and down. Without knowledge its very hard to make profit in the share market. One should also know about company portfolio, earning per share, background, sector and financially position to select the stock for investing.
Mutual fund option
Government scheme of Equity linked saving scheme(ELSS) has not performed well in recent years. So government allows the taxpayers to invest directly in the share market for avail the exemption under Rajiv Gandhi equity saving scheme 2012.
Government wants more and more people to enter share market. This is the example of government wanting. This is not only a tax saving scheme but also an opportunity to enter the share market as experience in share market is the most important factor for business as it tells what is up and down.
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