In a bid to boost retail investors' participation in the capital markets, the government has introduced a tax exemption scheme for equity markets targeted at new investors in the Union Budget 2012-13. A scheme christened as Rajiv Gandhi Equity Saving Scheme is expected to deepen bourses investors base and reduce volatility.
Under the proposed scheme, a 50% deduction on short-term capital gains tax will be allowed for new investors in the equity market up to an annual investment limit of Rs500,000. Currently, short-term capital gains tax is levied at 15% on all listed securities and units of equity-oriented funds. This means, investors will end up paying Rs 7.5% tax.
Only those taxpayers with an income of up to Rs10 lakh per annum will be eligible for it.
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