Rajeev Gandhi Equity Savings Scheme to be launched by Aug 15

Rajeev Gandhi Equity Savings Scheme (RGESS), the scheme which is supposed to bring capital market-shy investors into investing, may be implemented buy Aug 15.

Investment into this scheme will fetch 50 % income tax deduction to first time retail investors with annual income bellow Rs. 10 lakh. The government is musing over reducing the lock-in period of this scheme to 1 year from present 3 years.

It would be interesting to see whether investment through mutual fund route too shall get the acceptance especially when forthcoming DTC shall do away ELSS option from the section 80 C benefits.

This scheme was ambiguous since its inception. As per the scheme only first time investors can avail this scheme, this means anybody who has earlier bought even a single share would not qualify for the scheme.

Many employees get shares from their employers under the ESOP (Employee Stock Option Plan) and these shares are sold in the need of the money (after the lock-in period).

Will these employees shall be ineligible for this scheme?

The aim of this scheme is to bring the household savings into the market but then why this scheme is restricted to first time investors only?

Government better first remove this anomaly and then implement the scheme.