RGESS: Income limit raised to Rs 12 lakh; STT on MF redemptions slashed

Earlier the income limit was set to Rs 10 lakh

The Rajiv Gandhi Equity Savings Scheme (RGESS), one of the most talked about investment vehicles to attract retail money into equity markets, can now be availed by the first time investors having income up to Rs 12 lakh per annum. Earlier the income limit was at Rs 10 lakh. In addition to it, the scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares, not in one year alone, but in three successive years. The scheme allows investors to invest up to Rs 50,000 a year to claim tax rebate.

Further, with an aim to increase penetration of mutual fund products, sector's distributors will be allowed to become members in the mutual fund segment of stock exchanges so that they can leverage the stock exchange network to improve their reach.

On the Securities Transaction Tax (STT) front, the Union Budget proposed a reduction from 0.25% to 0.001% on redemptions of MF/ETF at fund counters. While on selling units on exchanges, STT is proposed to be slashed from 0.1% to 0.001%.

The list of eligible securities in which Pension and Provident Funds may invest will be enlarged to include exchange-traded-funds, debt mutual funds and asset backed securities, said Finance Minister.