FACTBOX - Govt dangles tax carrot for retail stock investors

Tue Nov 6, 2012 2:39am IST

An investor watches the share index at a local share and stock market in Chandigarh June 18, 2012. REUTERS/Ajay Verma/Files

An investor watches the share index at a local share and stock market in Chandigarh June 18, 2012.

Credit: Reuters/Ajay Verma/Files

Related Topics

REUTERS - India launched the Rajiv Gandhi Equity Savings Scheme in late-September, an initiative that aims to bring millions of first-time investors into stocks by offering a tax incentive to deepen market liquidity and reduce a reliance on gold savings.

Following are details of how the scheme works:

* First-time Indian investors earning less than 1 million rupees a year would be eligible for a 50 percent tax break on stock investments of up to 50,000 rupees.

* Investors will have half of however much they invest deducted from their tax bill.

* Investors can buy stocks directly or through mutual funds or exchange traded funds.

* Eligible investments are restricted to the top-100 stocks traded on the Bombay Stock Exchange and National Stock Exchange, as well as state-owned companies.

* The scheme imposes a 1-year blanket lock-in clause, meaning no changes can be made to the portfolio, and participants need to keep their money invested for at least three years.

* The scheme was proposed in the 2012-13 union budget by then Finance Minister Pranab Mukherjee, and was launched on September 21.

* India wants to tap the potential of the savings conscious urban and semi-urban middle class and turn equities into an attractive alternative to gold and cash.

* The scheme is also intended to reduce markets' dependence on volatile foreign flows.

(Compiled by Arup Roychoudhury; Editing by Ian Geoghegan)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage