Deduction under Section 80CCG: Investment made under an Equity Savings Scheme
This deduction is allowed to a Resident Individual assessee who has invested for the first time in listed equity shares or listed units of an equity oriented fund.
The individual should be a new retail investor, i.e. have invested for the first time and the Gross Total Income should be less than Rs. 12,00,000 in the year in which investment has been made.
The maximum amount of deduction shall be lower of the following:
- 50% of the amount invested
Deduction shall be allowed for three subsequent years starting from the Financial Year in which investment was made. For example, if X acquired government approved equity shares of LMN Ltd in Financial Year 2015-16, he can claim deduction under this section in Assessment Years 2016-17, 2017-18 and 2018-19.
There should be a ‘lock-in’ period of 3 years from the date of acquisition which means that if the investor transfers the said securities within 3 years of acquisition, he cannot claim deduction under this section. Also, any previously claimed deduction under this section shall be taxable in the year of transfer.
No deduction shall be allowed under this section in Assessment Years beginning from 1st April 2018. Only the individuals who have invested the amount in said securities in the Financial Year 2016-17 (Assessment Year 2017-18) can claim deduction up-to Assessment Year 2019-20.
- The investment should be done in schemes approved by the Central Government for this deduction.
- ‘Equity oriented fund’ implies such funds in which more than 65% of the total proceeds have been invested in the equity shares of the domestic company.