Para 7 - Period of holding and other conditions - Rajiv Gandhi Equity Savings Scheme, 2013

1 [7. Period of holding and other conditions. - (1) The period of holding of eligible securities invested in each financial year shall be three years to be counted in the manner hereafter provided. (2) The eligible securities shall be held for a period called the fixed lock-in period which shall commence from the date of purchase of such securities in the relevant financial year and end on the 31st day of March of the year immediately following the relevant financial year. (3) The new retail investor shall not be permitted to sell, pledge or hypothecate any eligible security during the fixed lock-in period. (4) The period of two years beginning immediately after the end of the fixed lock-in period shall be called the flexible lock-in period. (5) The new retail investor shall be permitted to trade the eligible securities after the completion of the fixed lock-in period subject to the following conditions, namely:- (a) the new retail investor shall ensure that the demat account under the Scheme is compliant for a cumulative period of a minimum of two hundred and seventy days during each of the two years of the flexible lock-in period as laid down hereunder:- (i) the value of the investment portfolio of the eligible securities referred to in sub-clauses (ii), (iii) and (iv) shall be exclusive of value of the investment portfolio of eligible securities which are in fixed lock-in for any financial year; (ii) the demat account shall be considered compliant for the number of days for which the value of the investment portfolio of eligible securities, is equal to or higher than the corresponding investment claimed as eligible for the purposes of deduction under section 80CCG of the Act ; (iii) in case the value of investment portfolio in the demat account decreases due to decrease in the market rate of eligible securities, then, notwithstanding the provisions of sub- clause (ii), - (A) the demat account shall be considered compliant from the first day of the flexible lock-in period to the day when any of the eligible securities are sold; (B) where the assessee sells the eligible securities mentioned in sub-clause (ii) from his demat account, and purchases eligible securities, the said demat account shall be compliant from the day on which the value of the investment portfolio in the account becomes - (I) equal to the corresponding investment claimed as eligible for deduction under section 80CCG of the Act ; or (II) equal to the value of the investment portfolio under the Scheme, before such sale, whichever is less; (iv) credit of eligible securities in the demat account exceeding the compliance requirement as per sub-clauses (ii) and (iii) shall be considered as fresh investment of the financial year in which the investment is made and shall be eligible for deduction in accordance with sub-section (1) of section 80CCG of the Act in that financial year; (b) the balance of the investment portfolio of eligible securities in the demat account, at any point of time during the flexible lock-in period, shall not be less than the amount corresponding to the value of the securities in the fixed lock-in. (6) The new retail investor s demat account created under the Scheme shall, on the expiry of the period of holding of the investment relevant to the last financial year for which the deduction has been claimed, be converted automatically into an ordinary demat account. (7) For the purpose of valuation of investment during the flexible lock-in period, the closing price as on the previous day of the date of trading shall be considered. (8) While making the initial investments upto fifty thousand rupees, the total cost of acquisition of eligible securities shall not include brokerage charges, securities transaction tax, stamp duty, service tax and any other tax, which may appear in the contract note. (9) Where the investment of the new retail investor undergoes a change as a result of involuntary corporate actions including demerger of companies, amalgamation and such other actions, as may be notified under sub- paragraph (11), resulting in debit or credit of securities covered under the Scheme, the deduction claimed by such investor shall not be affected. (10) In the case of voluntary corporate actions, including buy-back resulting only in debit of securities where new retail investor has the option to exercise his choice, the same shall be considered as a sale transaction for the purpose of the Scheme. (11) The Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall notify the involuntary corporate actions referred to in sub-paragraph (9) for the purposes specified therein.] ----------------------- Notes: 1. Inserted vide NOTIFICATION NO 94/2013, dated December 18, 2013