Rajiv Gandhi scheme: Govt. plans to allow tax benefits every year   : -                        



NEW DELHI, JAN. 23: Investors may soon be allowed to avail themselves of tax benefits in Rajiv Gandhi Equity Savings Scheme (RGESS) every year. A formal announcement is expected in the Budget.  The present scheme allows an individual, with annual income up to Rs 10 lakh, to invest up to Rs 50,000 in certain equities and mutual fund schemes to get tax benefits for the first year. The investor gets a 50 per cent deduction of the amount invested from the taxable income for that year. This benefit is given only once under Section 80CCG of the Income-Tax Act 1961. The new thinking has twin purposes — first to attract more investors into the equity market and second to provide an alternative for saving income tax. BEYOND RS 1 LAKH LIMIT   ???????? “The Finance Ministry is actively considering making this scheme a regular tax-saving instrument rather than just for first-time retail investors with once in a lifetime tax savings,” a senior Government official told Business Line. The scheme was announced in this year’s Budget and was notified on November 23, 2012. This tax saving is separate from investments made under the more popular Rs 1 lakh limit under Section 80C of the Income Tax Act. According to the official, a debate is on whether to make this limit a part of the deduction up to Rs 1 lakh under Section 80C of the Income-Tax Act or provide a separate limit. “A final decision on the modalities will be taken just before the Budget,” he added. At present, National Saving Certificates, Public Provident Fund, Post Office Saving Schemes, Life Insurance Policies and Employees Provident Fund, besides repayment of housing loans and health insurance polices and some other instruments are preferred for tax benefits.

Wednesday, January 23, 2013, Business Line