Govt will modify Rajiv Gandhi Equity Scheme in Budget 2013: FM


HomeNewsBudget ImpactExclusiveTaxRail Budget Celeb Speak Eco Survey

Govt will modify Rajiv Gandhi Equity Scheme in Budget 2013: FM

Last Updated: Sunday, February 10, 2013, 09:18
 Comment 2
Mumbai: Concerned over the reluctance of savers to park surplus funds in financial instruments, Finance Minister P Chidambaram on Saturday said he would modify the Rajiv Gandhi Equity Savings Scheme (RGESS) in the forthcoming Budget to make it more attractive for first time investors.

He said the ministry will revisit the tax incentive section in the scheme to address investor concerns.

"...Have assured the regulators that we will take the opportunity of the next Budget and the next Finance Bill to revisit the section and in the light of experience gained in designing the RGESS, we will make changes to that section so that the scheme become attractive to retail investors," he said after launching RGESS.

Admitting that concerns have been raised about the RGESS being too complex for a small investor to understand, he said, it would be made easy to participate in the scheme.

"It is being said that such sophisticated analysis is beyond the capacity and means of the small investors and complying with that would be difficult. Some have pointed out that the provision of 50 percent of the contribution up to Rs 50,000 be permissible as reduction is not an adequate incentive," Chidambaram said.

Explaining the features of the scheme he said that the government has allowed even mutual funds to come to the scheme which was initially for new retail investors.

"We have expanded to include a large number of demat account holders who may not have transacted in equities through a demat account and not undertaken any derivatives trading till date...," he said.

The Finance Minister also made a case to converge KYC norms for different financial sector regulators so that retail participation becomes seamless in the financial instruments.

"I think it is very important that KYC norms for all intermediaries, market regulator should converge and become one set of KYC norms. The next step is to converge the KYC norms for different set of regulators," he said.

"We cannot have multiple KYC norms for intermediaries and participants who are under one regulator, and worse, to have different set of norms for different regulator... That puts off the investor," Chidambaram said.

"And if investor stays away what is the justification of so many regulators and so many participants...The aim must be to attract investors... If you ask too many questions before an investor can open an account or participate, you frighten him away," he noted.

He also expressed surprise that if one has a bank account, then why can't one open demat account straight away.

"But if you do a pre-investigation before opening the account, I have no doubt in my mind that 5 out of 10 potential investors will be scared away, then they will say why should I waste my time," Chidambaram said.

"Life must be made simple, and we must be able to sell (to) the investors that by participating in the capital market, investing in financial instruments, investing in capital markets is good for the savers in the long run, good for the system and good for the country," he added.

The Finance Minister said the government wants the retail investors to come and invest in stock market.

"We wish to support the stock market and encourage retail investors to come to the stock markets," he said.

The RGESS, which was announced in the Budget for 2012-13, seeks to provide tax benefits to first-time investors in stock markets.

Under the scheme, an individual with an income of less than Rs 10 lakh would get tax incentives for investing up to Rs 50,000 in the stock market.

As per the notification issued by the Securities and Exchange Board of India (Sebi) on the RGESS, there would be a lock-in period of one year on investments made under the scheme.


First Published: Saturday, February 9, 2013, 15:16


can a person claim Tax benefit for himself for investment made in RGESS ,in the name of his son, of 20 years but dependent and having no income ?-vijaybhai -AHMEDABAD
Please can u send me the detail process of this Equity Scheme-mehraj pasha -hyderabad
First Prev 1 Next Last 

Post your Comments

Place :
Email :  
Comments :  
Other Stories
MSME Sector

P Chidambaram proposed continuing non-tax benefits to these units for three years.

Full Article »

IT-BPO Sector

Clarity on tax issues related to R&D centres in IT soon.

Full Article »


Big push to infra with Rs 50k cr tax-free bonds, two new ports.

Full Article »

Real Estate Sector

FM raised tax deduction limit by Rs 1 lakh for the first time home buyers.

Full Article »

Auto Sector

Excise duty on SUV will be raised to 30 percent from 27 percent.

Full Article »

More »

Latest Videos
Budget 2013: Tax slab remain unchanged Budget 2013: PM commends Chidambaram's budget Union Budget 2013: Chidambaram's Budget speech
Budget 2013: Tax slab remain unchanged Budget 2013: PM commends Chidambaram's budget Union Budget 2013: Chidambaram's Budget speech
rail budget
Rail Minister announced no hike in passenger fares.
know your fm
P Chidambaram- Man of all seasons.
Opinion Poll
How would you see Budget 2013 as?
Contact Us : Privacy Policy : Legal Disclaimer
Copyright © Zee Media Corporation Ltd. All rights reserved