Rajiv Gandhi Equity Savings Scheme or RGESS is a new equity tax advantage savings scheme introduced by the Ministry of Finance for first time investors in India, with the stated objective of "encouraging the savings of the small investors in the domestic capital markets.
The scheme enables the investor to earn the returns of equity market and be eligible for tax benefits on the investments made under this Scheme.
Investments into the RGESS are made through the DEMAT account. Eligible securities bought through the DEMAT account will automatically be subject to a lock-in during the first year. The investor will not be permitted to sell, pledge or hypothecate any eligible security during the fixed lock-in period. Trading of these securities is allowed after the completion of the fixed lock in period, subject to certain conditions
The investor is free to invest as much as he wants through his RGESS designated Demat account. However, for tax exemption purpose, only the investment made in the first year of his investment, subject to a maximum amount of Rs 50,000 is eligible. Further, there is no minimum eligible investment is required.
Any investment made in capital market is subject to market risk.
The investor may lose the tax benefits in the following cases:-
The investor can invest as many times as he wants in his first year of investment. Investment made in subsequent years will not be eligible for tax exemption.
The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
Investors can pick the below listed stocks from following categories
|Eligibility||Annual total gross income less than 12 lakh.||None||None|
|Lock-in Period||1 + 2 Year||3 years||15 Years|
|Tax Benefits||50% (under section 80 CCG)||100% (80 C)||100% (80 C)|
|Maximum Investment for Deduction||Rs.50,000/-||Rs.100,000/-||Rs.100,000/-|
|Minimum Investment||NA||Rs.500/- to Rs.5000/-||Rs.500/-|
|Need for DEMAT||Yes||No||No|
|Annual Return||Market Based||Market Based||8.7% (as notified by Govt from time to time)|
|Interest Earned||Non Taxable||Non Taxable||Non Taxable|
|Risk||Medium to High||Medium to High||Very Low|