Sucheta Dalal :Rajiv Gandhi Equity Saving Scheme: A complex and irrelevant scheme
Sucheta Dalal

Click here for FREE MEMBERSHIP to Moneylife Foundation which entitles you to:
• Access to information on investment issues

• Invitations to attend free workshops on financial literacy
• Grievance redressal

 

MoneyLife
You are here: Home » Current Articles » Rajiv Gandhi Equity Saving Scheme: A complex and irrelevant scheme
                       Previous           Next

Rajiv Gandhi Equity Saving Scheme: A complex and irrelevant scheme  

October 3, 2012

Intermediaries are convinced that despite no-frills demat accounts, the investment effort was far too cumbersome.


Sucheta Dalal

At Moneylife Foundation’s seminar on mutual funds on 26th September, an important topic on the sidelines was whether tax concessions offered under the Rajiv Gandhi Equity Saving Scheme (RGeSS) would lure small investors back to the market. Moneylife has already discussed the merits and demerits of the Scheme in detail. The issue now is simple: What is the effort that would be required for a first-time investor, earning less than Rs10 lakh per annum to get a Rs5,000 tax concession which locks up Rs50,000 for three years that may well be grossly depleted over that time? The answers were hilarious. Intermediaries were convinced that despite no-frills demat accounts, the investment effort was far too cumbersome, given the risk involved. SEBI and the income-tax department have also to work out a viable verification process for a first-time investor. Who will do it and at what stage? If depositories are burdened with the tax, who pays for it?

The mutual fund industry is also excited about getting this money, but nobody is quite sure how the verification process will work or the risk of harassment by the tax authorities later. PV Subramanyam, a stock market commentator and expert, cynically said on his blog “…we need a new set of bakras, do we not”? And that sums up the popular view on RGESS.


-- Sucheta Dalal



 



Recent Comments