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TIOL-DDT 236 · Tuesday, 8 November 2005 · story 2 of 8

Equity Linked Savings Scheme notified

By Vijay Kumar

Section 80C also allows deduction of investments in certain saving schemes notified by the Government. Now the Government has notified the Equity Linked Savings Scheme, 2005. Salient features are:-

  1. Amount to be invested in a plan of the Unit Trust or of a Mutual Fund shall be in multiples of Rs. 500 with a minimum of Rs. 500.

  2. Mutual Fund shall allot the Units not later than on 31st March, every year.

  3. The plan shall be open for a minimum period of one month during the financial year 2005-06 and a minimum period of three months during the subsequent years.

  4. Investment in the plan will have to be kept for a minimum period of three years from the date of allotment of units.

  5. In the event of the death of the assessee, the nominee or legal heir, as the case may be, shall be able to withdraw the investment only after the completion of one year from the date of allotment.

  6. Units issued under the plan can be transferred, assigned or pledged after three years of its issue.

  7. The funds collected under a plan shall be invested in equities, cumulative convertible preference shares and fully convertible debentures and bonds of companies.

  8. After a period of three years from the date of allotment of units, when the repurchase of units is to commence, the Trust and the Mutual Fund shall announce a repurchase price every month or as frequently as may be decided by them.

  9. Repurchase of Units will be at the repurchase price prevailing on the date the units are tendered for repurchase.

  10. A plan operated by Unit Trust or a Mutual Fund would be terminated at the close of the 10th year from the year in which the allotment of units is made under the plan.

NOTIFICATION NO .226/2005, Dated : November 3, 2005