Rajiv gandhi equity scheme - deduction under Section 80CCG

In Finance Act 2012, Government has introduced Rajiv Gandhi equity saving scheme to resident individuals, which will allow new retail investors to invest directly in to listed equity shares up to Rs. 50,000/- and avail the deduction of 50% of the investment in computation of his total income.  This deduction can be claimed only in one assessment year starting from assessment year 2013-14. The Government will announce a scheme in this regard specifying the shares in which the investment is to be made and eligibility of the individual to claim the deduction and other conditions as may be required.

Text of Section 80CCG

80CCG. Deduction in respect of investment made under an equity savings scheme.—

(1) Where an assessee, being a resident individual, has, in a previous year, acquired listed equity shares in accordance with a scheme, as may be notified by the Central Government in this behalf, he shall, subject to the provisions of sub-section (3), be allowed a deduction, in the computation of his total income of the assessment year relevant to such previous year, of fifty per cent of the amount invested in such equity shares to the extent such deduction does not exceed twenty-five thousand rupees.

(2) Where an assessee has claimed and allowed a deduction under this section for any assessment year in respect of

any amount, he shall not be allowed any deduction under this section for any subsequent assessment year.

(3) The deduction under sub-section (1) shall be subject to the following conditions, namely:—

(i) the gross total income of the assessee for the relevant assessment year shall not exceed ten lakh rupees;

(ii) the assessee is a new retail investor as may be specified under the scheme referred to in sub-section (1);

(iii) the investment is made in such listed equity shares as may be specified under the scheme referred to in subsection (1);

(iv) the investment is locked-in for a period of three years from the date of acquisition in accordance with the scheme referred to in sub-section (1); and (v) such other condition as may be prescribed.

(4) If the assessee, in any previous year, fails to comply with any condition specified in sub-section (3), the deduction originally allowed shall be deemed to be the income of the assessee of such previous year and shall be liable to tax for the assessment year relevant to such previous year.