• What is Rajiv Gandhi Equity Savings Scheme (RGESS)?

    RGESS is a new equity tax advantage savings scheme for equity investors in India, with the stated objective of "encouraging the investment of savings of the small investors in the domestic capital markets".
  • What is the objective of the scheme?

    • The objective of the scheme is to encourage the flow of savings and to improve the depth of domestic capital markets. This would help in promoting an 'equity culture' in India.
    • The scheme aims at widening the retail investor base in the Indian securities markets and also furthers the goal of financial stability and financial inclusion.
  • What are the benefits of RGESS?

    • A new section 80CCG under the Income Tax Act, 1961 on 'Deduction in respect of investment under an equity savings scheme' has been introduced to give tax benefits to 'New Retail Investors' who invest up to '50,000 in 'Eligible Securities and has a gross total income for the financial year less than or equal to Rs. 12 Lakh.
    • The investor would get a 50% deduction of the amount invested from the taxable income for that year u/s 80CCG. The benefit is in addition to deduction available u/s Sec 80C.
  • Who all will be covered under the scheme?

    The Scheme is open for all New Retail Investors who have gross total income less than or equal to Rs. 12 lakh. A new retail investor is one:
    • who is a resident individual (the benefit cannot be availed by HUF, corporate entities / trusts etc)
    • Who has not opened a Demat account and has also not done any trading in the derivative segment till November 23, 2013
    • Who has opened a Demat account and has not made any transactions in equity and /or in the derivative segment till November 23, 2013.
  • What is the Lock-in period?

    • The total lock-in period for investments under the RGESS would be divided into 'fixed lock-in period' and 'flexible lock-in period'.
    • The initial period of lock in shall be known as Fixed Lock-in Period, which shall commence from the date of purchase of such securities in the relevant financial year and end on the 31st day of March of the year immediately following the relevant financial year.
    • The period of two years beginning immediately after the end of the fixed lock-in period shall be called the flexible lock-in period.
  • What is the meaning of flexible lock-in period?

    • During 'Flexible lock-in' period, you can sell your eligible securities, subject to certain conditions which are as follows:  If you sell eligible securities during 'Flexible lock-in' period, then investment under RGESS must be
      • at least equivalent to investment claimed as eligible for deduction or 
      • Equal the value of investment portfolio before such sale, whichever is less 
    • This can be by way of increase in market value. This condition must be met for cumulative period of 270 days in a year for two years.
  • Where can I get information about these eligible stocks?

    • The consolidated and updated list of eligible securities from time to time is published on the websites of exchanges / Depositories / The Association of Mutual Funds in India (AMFI).
    • For detailed information see at the relevant pages of the websites of SEBI, NSE, BSE, NSDL, CDSL and AMFI.
  • What is the amount of deduction I am eligible for in a single financial year?

    Allowable deductions per year to a maximum of Rs. 25,000. This means that the maximum amount of investment allowed under the Scheme is only Rs. 50,000 for any single financial year.
  • Is there any document which I need to submit before investing under RGESS?

    • Yes. You should submit a declaration in 'Form A' duly signed by the account holder(s) for designating the demat account for RGESS to DP.
    • You can click here to download 'Form A'.
  • I have invested in 'eligible securities' but now I don't want them to be included under RGESS. What is the process?

    • You need to submit 'Form B' to the depository participant, if you wish to keep any securities outside RGESS's terms and conditions. This needs to be submitted within one month from the date of purchase/allotment of that security.
    • You can click here to download 'Form B'.
  • What will be the mode of holding eligible securities?

    The mode of holding eligible securities under RGESS will be in a 'Demat account'. You cannot hold securities in physical form or with a Mutual Fund directly to enjoy the benefits of RGESS.
  • Can I designate or open more than one demat account for RGESS?

    No. You can have only one demat account under RGESS, across depositories (i.e., NSDL / CDSL)
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