Expanding the scope of deduction and its eligibility under section 80CCG The existing provisions of section 80CCG, inter-alia, provide that a resident individual who has acquired listed equity shares in accordance with the scheme notified by the Central Government, shall be allowed a deduction of fifty per cent of the amount invested in such equity shares to the extent that the said deduction does not exceed twenty five thousand rupees. The deduction is a one-time deduction and is available only in one assessment year in respect of the amount so invested. The deduction is available to a new retail investor whose gross total income does not exceed ten lakh rupees. Rajiv Gandhi Equity Savings Scheme has been notified under section 80CCG.
With a view to liberalize the incentive available for investment in capital markets by the new retail investors, it is proposed to amend the provisions of section 80CCG so as to provide that investment in listed units of an equity oriented fund shall also be eligible for deduction in accordance with the provisions of section 80CCG. It is proposed to provide that “equity oriented fund” shall have the meaning assigned to it in clause (38) of section 10.
It is further proposed to provide that the deduction under this section shall be allowed for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units were first acquired by the new retail investor whose gross total income for the relevant assessment year does not exceed twelve lakh rupees.
This amendment will take effect from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
In section 80CCG of the Income-tax Act, with effect from the 1st day of April, 2014,—(a) in sub-section (1),—(i) after the words “acquired listed equity shares”, the words “or listed units of an equity oriented fund” shall be inserted;(ii) after the words “in such equity shares”, the words “or units” shall be inserted;(b) for sub-section (2), the following sub-section shall be substituted, namely:—“(2) The deduction under sub-section (1) shall be allowed in accordance with, and subject to, the provisions of this section for three consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units of equity oriented fund were first acquired.”;(c) in sub-section (3),—(A) in clause (i), for the words “ten lakh rupees”, the words “twelve lakh rupees” shall be substituted;(B) in clause (iii), after the words “listed equity shares”, the words “or listed units of equity oriented fund” shall be inserted;(d) after sub-section (4), the following Explanation shall be inserted, namely:—‘Explanation.—For the purposes of this section, “equity oriented fund” shall have the meaning assigned to it in the Explanation to clause (38) of section 10.’.