RGESS Rajiv Gandhi

rgess RGESS Rajiv Gandhi

Rajiv Gandhi Equity Savings Scheme, 2013

Now its Closed

Additional tax savings for new retail investors

Now avail additional tax benefit on 25,000 for maximum investment of 50,000 (over and above 1,00,000 under Section 80C of Income Tax Act) and save up to 5150 on Income Tax.

RGESS is first of its kind scheme in India which allows new retail investors to make equity investment upto 50,000 directly into equity shares and avail tax benefit on 50% percent under new section 80CCG.

This benefit is available to:

  • First time investors that have not transacted in the equity or derivate segment till Nov 23, 2012
  • Individuals with income less than 12 lakhs in a year

Investments eligible for RGESS:

  • Equity shares of companies in ‘CNX-100’ of NSE or BSE-100 or
  • Equities of public sector enterprises categorized as Maharatna, Navratna or Miniratna by the Central Government.
  • Exchange Traded Funds and Mutual Fund schemes with above securities as underlying
  • The mode of holding eligible securities under RGESS should be in a ‘Demat account’

How to assign investments for RGESS?

  • Submit a declaration in ‘Form A’ to a DP duly signed by the account holder(s) for designating the demat account for RGESS

Lock-in period: 3 years

  • 1 year of ‘Fixed Lock-in’ from the date of investment during which these securities cannot be pledged or sold
  • 2 subsequent years of Flexible Lock-in during which RGESS securities can be bought & sold

Effective 1 April 2013, investors with a gross total income of up to Rs.12 lakh can invest in RGESS, up from an earlier income limit of Rs.10 lakh. Investors can park funds in MFs and listed shares and extended tax benefits to three successive years.

Rajiv Gandhi Equity Savings Scheme, 2012,2013-14

Salient Features of RGESS
Tax Benefit over and above Section 80C: Investing RGESS –  may entitle you to tax benefits under Section 80CCG. This means that you now have the opportunity to avail tax benefits over and above the eligibility under Section 80C. Eligible Investors are entitled to tax benefits under Section 80CCG of the Income Tax Act, 1961 for the investments made in this scheme, subject to them complying with the requirements specified in Rajiv Gandhi Equity Savings Scheme, 2012.
Blue-chip investment Opportunity: Even if you aren’t eligible for tax benefits, you still have the opportunity to create wealth, as the scheme predominantly invests in equity shares of the 100 largest listed companies of India i.e. companies falling in the list of BSE 100 and CNX 100, and shares of PSU Maharatnas, Navratnas and Miniratnas. as categorized by the Central Government.
Lower Lock-in period: For those eligible and looking for tax benefits, Birla Sun Life RGESS – Series 1 has a low lock-in period of only 3 years. It has a fixed lock-in during first year followed by a flexible lock-in for subsequent two years. For further details, you may refer to the Scheme information document.
Tax Free Returns: On maturity of the scheme after 3 years, the returns on investments made in Birla Sun Life RGESS – Series 1 are totally tax-free in your hands. (Investors are advised to consult their tax advisor in view of individual nature of tax implication before investing)
For what maximum amount can I get tax benefits?

You can get tax benefits for a maximum investment amount of Rs. 50,000/-. 50% of the invested amount, i.e. Rs. 25,000/- in case Rs. 50000 are invested, is eligible for tax saving thereby helping you save Rs. 5150/-. (Assuming the qualifying amount of deduction is Rs. 25,000 and the investor falls in the Income Tax slab of 20% and includes applicable cess)

Investors are advised to refer the RGESS guidelines for claiming tax deduction under section 80CCG of the Income tax Act, 1961. Tax deduction(s) available u/s 80CCG of the Income Tax Act, 1961 shall be subject to conditions specified therein from time to time. For individual nature of tax benefits individuals are advised to consult their tax advisor before investing.

To invest is it compulsory to have DEMAT account?

You need a DEMAT account only if you are eligible and are looking for tax benefits. If not, you can invest in this scheme like you would in any other Mutual Fund scheme.
 
Rajiv Gandhi Equity Saving Scheme
What is RGESS? Rajiv Gandhi Equity Savings Scheme, 2012 is an equity and equity related investment that allows first time equity investors (buying REGSS) to avail of a tax benefit over and above the investments stipulated in 80C.
What is the objective of RGESS? To encourage the flow of savings of the small investors in the domestic capital market.
Who can invest? A first time equity investor whose gross annual income is not more than 10lac and who has never invested in equities before investing in RGESS.
What is the maximum permissible limit of investment in RGESS? Any amount. There is no upper limit.
(Tax related benefit available only up to the investment of Rs.50,000)
What is the maximum investment limit to avail of the tax related benefit? Rs.50,000.
What is the maximum tax benefit? 50% or the investment i.e. Rs.25,000 on an investment of Rs.50,000.
When can an investor claim the tax benefit of RGESS? Only during financial year of the purchase.
What should be the frequency of investment to avail of REGSS? it can be bought in one or more than one transactions during one financial year.
it can be bought in one or more than one transactions during one financial year. 3yrs. for all the kinds of RGESS investments.(MF, Equity etc.)
RGESS comes under which section of IT Act 80CCG
Is a demat account mandatory? YES. Demat account is mandatory.
What kind of investments can be a part of RGESS? It can be a mutual fund scheme, an exchange traded fund or eligible scrips (stocks in BSE100 & CNX 100 etc.)
When to specify the nature of an investment to be or not to be under RGESS? in case of an ETF or a scrip, the buyer needs to intimate the depository within a month of purchase about the treatment of the transaction.
When to specify the nature of an investment to be or not to be under RGESS? in case of an ETF or a scrip, the buyer needs to intimate the depository within a month of purchase about the treatment of the transaction.
Which schemes, ETFs & scrips are under RGESS? This can be found out on the website of stock exchanges. (the scrips from BSE Top 100 & CNX-100 on the date of investment)
Equity Shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government.
Fo
What happens if the purchase is done on 31st march? 3 trading day grace period is allowed so that the security can be credited into the concerned demat.
What will be the portfolio of an MF RGESS? The Portfolio will consist of the stocks specified to be in RGESS.
Demat Related information The demat must be opened on or after 23rd Nov-12.
Demat Related information For demat opened before 23rd Nov-12, there should be no purchase (of equity, derivative, ETF) in that demat to qualify for RGESS.
In a new demat, will the specified security be automatically considered to be under REGSS or it has to be notified to the depository? The investor needs to intimate the depository via form A or form B as per the requirement to avail of the RGESS investment tax benefit. In new demat, it can be automatically treated to be under RGESS.
Can an investment in RGESS be made in physical form? No
How to ensure that the demat account opened on or after 23rd Nov. is for RGESS purpose? The investor needs to intimate the depository via form A or form B as per the requirement to avail of the RGESS investment tax benefit.
How to ensure that the existing demat holding is for RGESS? The investor needs to intimate the depository via form A or form B as per the requirement to avail of the RGESS investment tax benefit.
Lock-in period 3yrs. From the date of purchase in case it is an MF scheme and not tradable.
What happens if the lock-in requirement is violated? The deduction is withdrawn.
Fixed Lock in Period (no sale of RGESS securities allowed) 1yr. Starting from the date of first purchase and ending exactly 1yr. After the last purchase under RGESS. Example – purchase happens on 1st jan-13, 15th Feb-13 and 30th Mar-13. in this case the lock in begins from 1st Jan-13 and ends on 30th Mar-14 (exac
Fixed Lock in Period (no sale of RGESS securities allowed) During the fixed lock in period, the stipulated securities are not allowed to be sold, pledged or hypothecated.
Flexible lock in (2nd year) The securities can be traded but the holding of the RGESS eligible securities in the demat must be for at least 270 days (may not continuously) during the flexible lock-in year. The total average value or the eligible securities (at the time of transactio
Flexible lock in (3rd year) The securities can be traded but the holding of the RGESS eligible securities in the demat must be for at least 270 days (may not continuously) during the flexible lock-in year. The total average value or the eligible securities (at the time of transactio
What happens at the end of 3 years of lock-ins? The demat converts into a normal demat and the securities do not attract any rules/guidelines stipulated to avail of the benefit of RGESS.
 
 

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