Rajiv Gandhi Equity Savings Scheme Tax benefits


Rajiv Gandhi Equity Savings Scheme Tax benefits

The government has stated its plan to introduce an equity plan scheme that shall offer with much better tax benefits for everyone enrolled under it. The new equity plan is also expected to offer with much improved norms as compared to the previous equity scheme. Apart from this to introduce the new scheme the government also aims at enhancing present investment limit such that it offers with four times more tax benefit as compared to any other scheme.

Need for implementing New equity scheme

  • It is obvious that after the market downfall in the year 2008-09 not many investors were interested in making an investment in equity schemes. Despite many efforts, the government could not convince retail investors to put in some extra amount of money for equity funds.
  • After the failure of the previous scheme government has decided to introduce a better scheme that is more flexible and offers with much better potential to the buyers. To make it more effective government has also stated that the new scheme shall be considered as a replacement for the previous one.

Benefits of the new scheme

  • The new scheme introduced is more attractive and offers with better savings to the investors. Apart from this it is certain that the new scheme is more flexible in terms of investment. For investors the scheme also offers with higher investment limits. It is believed that investors did not invest much in previous scheme because it offered with lower investment limits.
  • With the introduction of the new equity scheme the government is aiming to offer investors with much higher investment limits. This is one factor that will also offer investors with greater tax benefit that is equivalent to around Rs 2 lakh. The government has stated that the tax benefit offered is also at least four times much higher as compared to previous scheme.

Reasons for introducing the new equity scheme plan

  • It is certain that the previous scheme (RGESS) was aimed to target anyone investor. So investors who did not operate demat account or even if transactions were not reflected in their account could invest money in the scheme.
  • The investment scheme also reflected that only 57,000 accounts were operational under the scheme with an overall corpus equivalent to around Rs 154 crore.
  • The scheme was not designed to offer much benefit to tax payers as it was considered as being very much restrictive and complex for new investors. To introduce the new scheme it is certain that the government had collected recommendations for many different investors from the market.

It is certain that the new scheme launched by the government is aimed to eliminate the mistakes made in the earlier scheme (RGESS). Most recommendations made by the investors have been considered when preparing the new equity scheme to offer with maximum tax benefit to the investors in general.

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