Para 8 - Effect of failure to fulfil conditions - Rajiv Gandhi Equity Savings Scheme, 2013

1 [ 8. Effect of failure to fulfil conditions. - (1) If the new retail investor fails to fulfill any of the provisions of the Scheme, the deduction originally allowed to him under sub-section (1) of section 80CCG of the Act for any previous year, shall be deemed to be the income of the assessee of the previous year in which he fails to comply with the provisions of the Scheme and shall be liable to tax for the assessment year relevant to such previous year. (2) Without prejudice to the provisions of sub-paragraph(1), where the demat account is not in compliance with the conditions laid down in paragraph 7 in respect of flexible lock-in period, the deduction originally allowed to the investor under section 80CCG shall be liable to tax in the following manner, namely:- (a) if the investment portfolio in flexible lock-in period corresponds to the investments made in only one assessment year, the deduction allowed to the investor under section 80CCG for such assessment year shall be liable to tax; (b) if the investment portfolio in flexible lock-in period corresponds to the investment made in two assessment years, and-- (i) the value of investment portfolio of eligible securities in the demat account is equal to or more than the value of the investment portfolio of the eligible securities in respect of which the deduction was allowed for any one assessment year but is less than the aggregate value of the investment portfolio of the eligible securities in respect of which the deduction was allowed for the two assessment years for 270 days in the flexible lock-in period, the deduction allowed to the investor under section 80CCG for the other assessment year shall be liable to tax; (ii) is not covered by sub-clause (i), the aggregate deduction allowed to the investor under section 80CCG for both the years shall be liable to tax. Explanation .-It is hereby clarified that in the case where the value of the investment portfolio of eligible securities is more than the corresponding value of such securities in respect of which deduction has been claimed in either of the two financial years, the deduction corresponding to the financial year in which the value of investment portfolio of eligible securities is less, shall be liable to tax. (3) Where the deduction in respect of any amount as referred to in sub- paragraphs (1) and (2) has been charged to tax, the value of the investment portfolio of eligible securities for the purposes of compliance under paragraph 7 for the remaining period of flexible lock-in shall be equal to or higher than the value of the eligible securities in respect of which the deduction was originally claimed as reduced by the value of eligible securities in respect of which the deduction has been charged to tax. ----------------------- Notes: 1. Inserted vide NOTIFICATION NO 94/2013, dated December 18, 2013