Saturday, 2 February 2019

Deduction in respect of investment made under an equity savings scheme(Section 80CCG) | IT Circular 1/2019

Deduction in respect of investment made under an equity savings scheme(Section 80CCG) | IT Circular 1/2019

Deduction in respect of investment made under an equity savings scheme(Section 80CCG):

Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777E, dated 23.11.2012(subsequent corrigendum SO NO. 2835E dated 05.12.2012) and
amended vide notification SO No. 3693E dated 18.12.2013 as a scheme under this section. The scheme was modified in December 2013 vide notification SO 3693 dated 18.12.13 (RGESS, 2013). The deduction under this section in accordance with RGESS 2013 is available if following conditions are satisfied:
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  • The assessee is a resident individual 
  • His gross total income does not exceed Rs. 12 lakhs;
  • He has acquired listed shares in accordance with a notified scheme or listed units of an equity oriented fund as defined in section 10(38);
  • The assessee is a new retail investor;
  • The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
  • The assessee satisfies any other condition as may be prescribed.
Amount of deduction – The amount of deduction is at 50% of the amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000. 

Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

This deduction is allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year. 
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The deduction under this section for F.Y. 2018-19 shall be allowed to an employee who has claimed deduction under this section for F.Y 2016-17 if he is otherwise eligible to claim deduction as per provisions of this sections

Deductions under Chapter VI-A of the Act |  | IT Circular 1/2019

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