Save tax : Rajiv Gandhi Equity Savings Scheme

[niraj thacker]

Hi All,

This is with reference to Rajiv Gandhi Equity Savings Scheme.

Get additional deduction u/s 80CCG : i.e. 50% of amount invested under the scheme.

Highlights and observations :

 ü  Available to resident Indian

ü  Maximum investment limit : 50000/-

ü  Only 1^st time investors in equities can avail the benefit

ü  2^nd or 3^rd holder of demat accounts, who have not invested in equities till date, can avail the benefit by opening a fresh demat account as a 1^st holder.

ü  Opening a demat account is compulsory to avail this scheme

ü  Gross total income should not exceed 10 lakhs

ü  Holding period will be 3 years

The details of product as well as process of the scheme are given below:

Product Note:

Overview

Rajiv Gandhi Equity Savings Scheme (RGESS) is aimed at encouraging small investors to channelize their savings into domestic capital markets.

Tax Benefit

 Under this scheme, a one-time deduction for income tax purposes will be available to a “new retail investor.”

The new retail investor will be eligible for a deduction on the actual amount invested in ‘eligible securities’ in the first financial year, subject to maximum investment limit of Rs 50,000 under the newly introduced Section 80-CCG.

Deduction u/s 80 CCG, is available on 50% of the amount invested. The benefit is in addition to deduction available u/s Sec 80C.

Eligibility Criteria

The deduction will be available to a ‘new retail investor’ whose gross total income for the financial year, in which investments are made under the scheme, is less than or equal to Rs 10 lakh.

Any resident individual, who has not opened a demat account and has not made any transactions in the derivative segment as on the date of notification of the scheme, will fall under the definition of ‘new retail investor’.

Any, any individual who has opened a demat account before the scheme’s notification, but has not made any transactions in the equity segment or the derivative segment till the date of notification, will be considered as ‘new retail investor’.

Eligible securities

Eligible securities will include Units of exchange-traded funds (ETFs) or mutual fund schemes with RGESS-eligible securities as underlying will be counted as eligible securities for investment.

Equity shares falling in the list of equity declared as “CNX-100” (by NSE) or “BSE-100” (by BSE);

Equity shares of public sector enterprises that are categorized as Maharatna, Navaratna or Miniratna by the Central Government. Also,

Follow-on public offer of BSE-100 or CNX-100 and certain public sector enterprises, besides new fund offers of mutual funds, will also qualify as eligible securities.

Holding Period

The holding period of eligible securities is three years, with fixed lock-in of first year and a flexible lock-in period of two years. In the ‘flexible lock-in’ period, investors will be permitted to trade, subject to conditions.

Interested in  Rajiv Gandhi Equity Saving Scheme or any query : rewert to ni...@profittantra.com or call @ 9916740560