First time share buyer? Expect more tax breaks in Budget 2017

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First time share buyer? Expect more tax breaks in Budget 2017If you are going to buy shares for the first time, you can expect some respite when Finance Minister Arun Jaitley announces Budget 2017 on Feb 1.
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In a bid to encourage more people to move towards Indian stock markets, Indian government may announce tax breaks for first time direct equity investors. As per several reports, it is also likely that Jaitley may announce a new scheme in this regard or tweak the existing Rajiv Gandhi Equity Savings Scheme (RGESS) for attracting investment.

The new or modified scheme will be under Section 80 (C) plan that will be likely be announced in the budget for 2017-18.

Jaitley may raise tax breaks offered on money in a pool of savings instruments such as fixed deposits, insurance premium and mutual funds from Rs 150,000 to above Rs 200,000 a year.

Presently, households enjoyed tax breaks on equity-linked savings schemes (ELSS) of mutual funds within the overall Rs 1.5 lakh limit under Section 80C of the Income Tax (I-T) Act and under 80CCD for National Pension System contributions up to Rs 50,000 a year.

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Meanwhile, RGESS may be tweaked as the scheme has not many takers due to complexity.

Only new or first time retail investors with an annual gross income of less than Rs.12 lakh are eligible to invest in the scheme.

The scheme also comes in with lock-in period of three years, with a fixed lock-in during the first year followed by a flexible lock-in for subsequent two years.