A new scheme called Rajiv Gandhi Equity Savings scheme is proposed in the Union Budget 2012-13 to encourage flow of saving in financial instruments and improve the depths of domestic capital market. The Union Finance Minister Shri Pranab Mukherjee in his Budget speech in Lok Sabha said that the scheme allows for income tax deduction of 50 per cent to new retail investors, who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakhs. The scheme will have lock-in period of three years. The details will be announced in due course. However No provision was proposed in Finance Bill, 2012 to provide for deduction in respect of investment made under any equity saving scheme.
Finance Bill, 2012 as passed by Lok Sabha
Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:
(a) The assessee is a resident individual (may be ordinarily resident or not ordinarily resident)
(b) His gross total income does not exceed Rs. 10 lakhs;
(c) He has acquired listed shares in accordance with a notified scheme;
(d) The assessee is a new retail investor as specified in the above notified scheme;
(e) The investor is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
(f) The assessee satisfies any other condition as may be prescribed.
Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares. However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year.
Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed
Finance Bill, 2012 as passed by Lok Sabha
Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:
(a) The assessee is a resident individual (may be ordinarily resident or not ordinarily resident)
(b) His gross total income does not exceed Rs. 10 lakhs;
(c) He has acquired listed shares in accordance with a notified scheme;
(d) The assessee is a new retail investor as specified in the above notified scheme;
(e) The investor is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
(f) The assessee satisfies any other condition as may be prescribed.
Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares. However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year.
Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed
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