This Scheme would give tax benefits to new investors who invest up to Rs 50,000 and whose annual income is below Rs 10 lakh.
"The Scheme will encourage the flow of savings and improves the depth of domestic capital markets, but also aims to promote an ‘equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets," a release from the Ministry of Finance has stated.
Salient features of the Scheme are as under:
1) The Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account.
2) Those investors whose annual taxable income is ≤ Rs. 10 lakhs are eligible under the Scheme.
3) The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.
4) Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 cr for each of the immediate past three years, would also be eligible.
5) In addition, considering the requests from various stakeholders, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their unde underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.
6) To benefit the small investors, the investments are allowed to be made in instalments in the year in which tax claims are made.