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Rajiv Gandhi Equity Savings Scheme (RGESS)

Rajiv Gandhi Equity Savings Scheme (RGESS) is a new equity tax advantage savings scheme for equity investors in India. 

The scheme got it's approval on September 21, 2012. It is exclusively for the first time retail investors in securities market.

Who Can Apply For RGESS

Answer these questions?

1. Whether your gross total annual income below Rs 10 lakh? YES/NO
2.  Do you have a demat account? YES/NO
3. Have you made any transactions in equity or derivatives before November 23, 2012?  YES/NO

 1. First criteria that is your annual gross income should be below 10 lakhs to apply for this scheme.

2. The second criteria is whether you made any transaction in equity or derivatives before Nov 23, 2012, if answer is yes, then you are not eligible for this scheme.

3. Now the third criteria having demat account is important, if you don't have demat, still you can go ahead with this scheme by opening demat account with either NDSL or CDSL through a depository participant. A depository participant is either a broker or a bank and you can get a list of depository participants from NSE, NDSL and CDSL site

4. If you have demat, but not operated before for any transaction  then you should designate that account as a RGESS account. You can use the Form A for this purpose.

Where to invest to get tax benefit under RGESS
1. Equity shares falling in the list of securities declared as "BSE-100" or " CNX-100".

2. Equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government

3. Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible under Rajiv Gandhi Equity Savings Scheme (RGESS) as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.

4.Follow on Public Offer of eligible securities.

5. New Fund Offers (NFOs) of eligible ETF's and mutual funds.

6. Initial Public Offer of a public sector undertaking wherein the government shareholding is at least fifty-one per cent. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years;


3. How much you can invest in RGESS
The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year. The benefit is in addition to deduction available u/s Sec 80C.
The deduction is available under section 80CCG.
Is this tax deduction of maximum of Rs.50,000 over and above limit of Rs.1,00,000 that is currently available for me under section 80C of income tax act ? 

Yes. You can avail Rs.1,00,000 under Section 80C of Income Tax Act and Rs.25,000 for maximum investment of Rs.50,000 under 80CCG.

What is section 80CCG 
A new section 80CCG under the Income Tax Act, 1961 on ‘Deduction in respect of investment under an equity savings scheme’ is introduced to give tax benefits to ‘New Retail Investors’ who invest up to Rs.50,000 in ‘Eligible Securities’ and whose gross total annual income is less than or equal to Rs.10 Lakhs. 

How much tax benefit you will get if you invest Rs.50,000  in RGESS?

Tax Savings of Rs 2575 for investors under 10% slab
Tax Savings of Rs. 5150 for investors under 20% slab 

Whether having lock in period in RGESS?
The scheme is locked in for 3 years. Fixed lock-in during first year followed by a flexible lock-in for subsequent two years.

Once the investments are made in the eligible securities, they must be locked-in for a period of three years from the date of investment. In case you intend to dispose of the holdings earlier than three years, it can be done after completion of at least one year from the date of investment subject to certain conditions. Thus, the holding period under RGESS is for three years, which includes ‘Fixed Lock-in’ for one year and Flexible lock-in for two years.

An investor is not permitted to sell, pledge or hypothecate any eligible investment during the fixed lock-in period.

  Forms for RGESS
1. Form A
2. Form B
3. Form C


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