Saturday, March 1, 2014

Save more tax, invest in RGESS

If you are a new equity investor, you can invest in Rajiv Gandhi Equity Savings Scheme (RGESS) and save taxes up to Rs 7725. This tax saving is over and above the standard deduction of Rs 1 lakh.

First time equity investors with a gross annual income of up to Rs 12 lakh can avail a deduction of up to Rs 25,000. This deduction is subject to maximum investment limit of Rs 50,000 under Section 80-CCG.

Eligibility criteria

You should be a resident of India & a 'New Retail Investor'.

You should not have traded in equity market or derivatives market prior to RGESS

Your Annual Gross Income for the Financial Year should not exceed Rs. 12 Lakh.

Features of the scheme
Maximum investment limit under this scheme to avail tax benefit is Rs. 50,000/-, subject to a deduction of 50% on the amount invested

Flexibility to invest in a staggered manner in the RGESS eligible securities in one financial year

The total lock-in period for investments under the Scheme would be 3 years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.

If the investor fails to meet any of the stipulated conditions, the tax benefit will be withdrawn.

Meaning of New Retail Investor
A 'New Retail Investor' is any resident Individual who has not opened a demat account and has not made any transactions in the equity or derivative segment before November 23, 2012.

In case the demat account is opened as a first holder, but there are no transactions in the equity or derivative segment,

In case the individuals name is in the demat account as a joint holder,

The annual gross income of the individual is less than or equal to Rs. 12 Lakhs for the financial year in which the investment is made under the scheme

Eligible securities under RGESS

Companies belonging to BSE-100 or CNX-100 and their Follow On Public Offers.

PSUs designated as Maharatna, Navratna or Miniratna and their Follow On Public Offers

Mutual Fund or Exchange Traded Fund Schemes investing in RGESS eligible securities and their New Fund Offers

Initial Public Offers of PSU with 51% or more government holding



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